Vol 33, No. 4

Volume 33, Number 4
-
WINTER 1992
OFFICERS
STAFF
CHAIRMAN OF THE BOARD
james B. Groff
j . james Barr
Executive Director
American Water Works Company
PRESIDENT
William D. Holmes
Consumers Water Company
1 st VICE PRESIDENT
j. Richard Tompkins
Middlesex Water Company
GENERAL VICE PRESIDENTS
jack E. McGregor
Bridgeport Hydraulic Company
Ronald S. Dungan
General Waterworks Company
Robert A. Luksa
Philadelphia Suburban Water Co.
Floyd E. Wicks
Southern California Water Co.
Sharon L. Gascon
Deputy Executive Director .
Michael j. Horner
Director of Communications
and Conferences
james L. Good
Director of Government Affairs
jean Lew is
Executive Assistant
Bonita j. Hayden
Bookkeeper
Deana Bursell
Secretary
Audra Zellner
Program Assistant
SECRETARY
james B. Groff
TREASURER
Sharon L. Gascon
Copyright 1989, National Association of Water
Companies.
The articles printed in this magazine do not necessar~
ily represent the position of the National Association
of Water Companies. NA we disclaims responsibility for:-lll information provided by individual authors
or organizations and published in WATER magazine,
including technical information which should be independently verified by separate sources.
About the Cover:
Intake stmcture for White River North Water Treatment Plant, Carmel, IN, owned by Indianapolis Water
Co. and constructed by Bowen Engineering Corp.
Photo by Dan Francis, Mardan Photography.
CONTENTS
The Presiden t's Message ....
Annual Conference Wrap Up
Presentation of J.J. Barr
Scholarship Award .. . ...... .
Management Innovation Con test ... .
NA WC's Board of Directors .
1992 Conference in Photos ....... . .
Opportunities for Investors,
by Wendell F. Holland ..
T riumph out of Chaos,
by James W. Shaffer. . .. . .... .
NAWC Water Technology
Committee Report .. . ......... .
Potential Consequences of
Abandon ing Cos t~ Based
Declining-Block Rates,
by Thomas R. Stack . . ...... .
W ater Treatment: A Joint Effort
Adding to Your Comrntmications
Reach, by Larry L. Bingaman .
Preserving Primacy in Missouri,
by T efry L. Gloriod
H urricane Response,
by Roger Ytterberg .
System T rends in the 90's for Utility
Companies,
by Barry Strock ..
Radio Watch in Action,
by Roger Ytterberg . .
The Dilemma of Taxation of
Contributions In Aid of
Construction,
by Steven J. Densberger ...
Executive Director's Report
Regulatory Relations Report.
Recent Regulatory Decisions
Customer Service Report .. .
Tax Adviser ............ .
Public Relations . .. ........ .
Corporate Changes .....•.. . ..•..
Etcetera ... . ............... .
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39
40
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43
44
46
48
51
56
59
60
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WATER-Published four times cflch year by the National AssociaTion of Water Companies, Suite 1212, Ins K Street, N.W., Washington, OC 20006. NA we is a nonprofit trade association
dedicated to serving rhe needs of the investor-owned state-regulated, public water supply industry. WATER is circulfltcd to fill Active find As~oeiate Members of the Association, members and
st'dff of public utility commissions, federal and state officials concerned with our industry and will be sent to qualified persons llpon written request. Rcquests and changes of address should
be sent to NAWe, Suite 1212, 1725 K Stred, N.W., Washington, DC 20006 (202) 833-8383.
The President1s Message
by William D. Holmes
O
ur Annual Conference is behind us and we are into a new
year for our Association. It is an honor and privilege for
me to serve as President of this Association, and it will be
a challenge to continue the progress and accomplishments of the
Association under my predecessors' leadership.
With the help of a lot of people, we had a great conference. The
H yatt Regency provided an excellent facility for our group. and
Hilton Head Island proved to be a sufficient attraction to draw the
second largest attendance in our Conference history.
Although the weather did not cooperate with our plans to have a
seaside reception and cookout, the indoor arrangements turned out to
be quite satisfactory and it appeared all had a good time. We certainly
want tD thank our twenty corporate sponsors of the event.
The political satire of the Cap itol Steps got the Conference off to
a fast and lighthearted start. Unfortunately, the real political
campaign that ensued was often as comical as their satire.
My special thanks to Our four moderators of panel discussions,
Rich Tompkins, Jay Weinhard[, Paul Foran and George Johnstone.
Given the general subject matter to be covered, they each put
together a panel of knowledgeable pre1:ienters and coordinated the
subject matter to provide informative and provocative panels.
Certa inly one of the highlights of the Conference was the naming
of Mike Zihal as our new Honorary Member. Mike and his wife
Dorothy have become familiar and fa~orite people to all who have
been a part of our Association for any length of time, and they richly
deserve this honor.
While on the subject of Honorary Members, we had sixteen
Honorary Members and/or Past Presidents, most of whom are no
longer active in the day~to~day affairs of their companies, attend the
Conference. It is always good to see and vis it with these folks who
have contributed so much to our Associat ion and industry, and I hope
they will continue to return to future conference1:i.
The importance of the committee structure within our
organization was amply illustrated at the Conference with the
excellent General Session Program on effective legislative relations
organized by the Government Relations Committee and the
Wednesday afternoon sem inars put on by the Small Companies,
Employee Relations, and Public Information Committees, all of
which were well attended and received.
Our Association has completed its first year of operating under its
new by~laws with the significant reduction in the number of directors.
A[ the Board Mee[ing held a[ [he close of [he Conference, we had 34
of the 35 directors in attendance. I feel this was an indication of the
interest and commitment of the decision makers of our industry to our
Association. Our officers and Washington staff must rema in cognizan t
of the importance of maintaining thCi interest and direction from this
board in establishing Association policies and goals.
At the Conference, NA WC officially introduced its newest
chapter, the Washington Chapter, in Wash ington state. We look
forward to participation from our new Washington members.
I'U end my comments on the Conference with thCi
acknow ledgement. To my Consumers Water Company associates,
1:iome fifty strong; to the three lovely ladies from Middlesex Water
Company who served their apprenticeship in preparation for Rich
Tompkins' C onference next Fall in Williamsburgi and to Mike
Homer and Bonnie Hayden from the Washington office (collectively
[he folks in the green blazen;), my special thanks for your able
assistance. Hopefu lly, "many hands made light work!" This was Mike
Homer's first conference as Coordinator and he performed flawlessly.
I could not have asked for an eas ier person to work with or a more
professional approach to his job.
In his President's message to the membership, Jay Weinhardt
reported that the goals the Executive Committee had set for our
Association several years ago have essentially all been met. He
presented to the Board of Directors, and they adopted, ten new, or in
some cases expanded, fivc~year goals for die Association to pursue.
T hey are:
• Become mme proactive in the re~authorization of the SDW A.
• Establish a pre1:ience in EPA to address those issues that impact
the investor~owned industry.
• Encourage and facilitate privatization of municipal systems and
public/private partnersh ips.
• Aggressively pursue tax issues to provide greater equity between
investor~owned, and munic ipally owned, water utilities.
• Improve communications within the organization, with
emphasis on strengthening ties between the national and its
chapters such that the overall organ ization becomes more
effective in its legislative and regulatory initiatives.
• Increase membership, and further consider inclusion of investor~
owned wastewater utilities in the Association.
• Aggressively pursue organization of additional state chapters.
• Con tinue a strong, assertive regulatory relations program.
• Maintain a sound financial position and reserve.
• Promote investo[~owned water utilities' contributions to the
nation's public health and economic viability.
With the continued support of our Executive Committee, our
Board of Directors, our Committees, our Chapters and our very
capable Washington Staff, 1 am committed to moving our Association
toward the meeting of these goals. ,
W INTER 1992
3
c
NAWC Members Flock to Hilton Head
for Annual Conference
Thanks to NAWC's Public Information
Committee for contributing to this article.
NA WC's 96th Ann ual Conference,
Ocrober4-7, at the Hyatt Regency in Hilton
Head, South Carolina, goes down in NAWC
history as its second most well,attended
Conference, with 733 attendees. Many at'
tendees were welcomed to Hilton Head by
torrential rains on October 3, but as the
Conference began, the weather improved.
On Sunday, the rain subsided long enough
fo r NAWC's golfers to get in eighteen holes.
fu o ne golfer said, "It was like a miracle.
Just as we had gotten into our cans and
began driving to our starting holes, the sun
appeared," Tennis players were not so forru,
nate, as the downpours of Saturday and
Sunday morning soaked the courts. Courts
were playable by the aftemoon , but play was
halted by another downpour prior to the
end of the tournament, which was con'
eluded later on during the Conference.
The rains of Sunday afternoon forced
relocating the evening beach party to an
inside ballroom. NAWC attendees (and hotel employees, who saw their outside set,up
ruined by driv ing rains, and had to rc,set
Following the Cap ito l S teps, the
Conference's in itial General Sess ion was
kicked off by Cunference Chairman Bill
Holmes introducing The Honorable Henry
Yonce, Chairman of South Carolina's Pub:
li c Service Co mmi ss ion . Commissioner
Yonce gave a welcoming address, including
an extensive h istory of Hilton Head and
o ther areas of South Carolina.
sible.
NA WC President l ay Weinhardt fol-
Commissioner Gordon also spoke of en,
vironmental concerns. He noted that we
need gcxxf science and a sense of proportion
lowed with his welcom ing statement, and
Chairman of the Board Jim Barr continued
wid1 the presentation of the Honorary Mem,
using these huge amounts of money to meet
environmental goals.
ber Award, to Michael Zihal, formerly of
Long Island Water Curp. A feature on the
Honorary Member presentation begins on
page 8.
The Honorable Kenneth Gordon, Presi,
dent, National Assoc iation of Regulatory
Utility Commissioners, brought his message
to the convention and spoke of the excel,
lent, cooperative relationsh ip between the
water industry and NARUC. He pointed
out that the Water Committee of NARUC
meets annually with rep resentatives of
everything inside in less than two hours)
NAWC.
showed their adaptive spirit and had a won,
derful time, enjoying the food and drink
Commissioner Gordon indicated that
water regulation is moving into the main'
provided by the party's sponsors, and meet,
stream with a higher and highet profile. He
ing NA WC friends, old and new.
spoke of the water industry spending huge
sums of money to meet the Safe Drinking
Water Act Regulations, but indicated that
Monday Morning
that is being used in the telecommunication
industry may be a natural for the water
industry. He agrees that these incentive sys,
terns are no t perfect systems, but in indus,
tries as wcll,defined as the water industry,
incentive programs may be altogether fea,
in reasonably handling risk as a basis for
Forrest Presentation
During the second part of the morning
session, Keith Forrest, Vice President and
Director of Economic Research of the Unum
Life Insurance Company gave participants
an excellent insight into the economic out,
look for the 1990's. Forrest believes that the
90's will be a mirror image of the 80's, ai,
though we will spend less than we eam
during this decade. We will, as a nation,
revere savings, investments and pnxluctiv,
ityand will begin to take down both public
and private debt. This will be the trend of
the decade. This would also suggest a very
slow growtb posture for the first half of tbe
1990's.
According to Forrest, American business
is being restructured to meet the new chal ,
this spending must be well-founded. In those
lenges of the 1990's. Businesses will be forced
who prov ided their irreverent musical in,
te rpretations of the latest political develop,
areas of the country where water has been
underpriced, rate structure changes will meet
with resistance-someth ing we in the in,
dustry have know for many years. Commis,
sioner Gordon also discussed least cost plan'
to become more effic ient. A merican con'
sumers are sca red. They are not buying,
causing economic cc ilings-or caps---on
economic growth. American consumers arc
ments. The Steps were buoyed by the up-
ning as a method that may be used by the
coming election and the previous week's re,
entry into the race by Ross Perot, and gave a
memorable performance to a full,hollse of
water industry in meeting the new regula'
country is sacrosanct.
There are some favorable s igns as busi,
ness does get leaner and meaner. Produc,
tivity is slowly but definitely increasing.
On Monday morning, the Conference
officially opened with a presentation of the
colors by the U.S. Marines, of Paris Island.
They wcre followed by the Capitol Steps,
NA WC attendees.
4
NAWCWATER
tions of the Safe Drinking Water Act.
According to Commiss ioner Gordon,
incentive- also ca lled price regulation-
primarily afraid of layoffs. No job in this
The last five years of this decade are
,
predicted to take off like a rocket.
Forrest discussed the health care cost problems of this country. Medical inflation has
o utstripped n o rmal infl at io n since
Methuselah, and will continue to do so.
The significance and reasons that we look
at something like the medical inflation rate
are as follows: If you have a commodity or a
sClVice that continues to outstrip normal
inflation, it invites further public sector in~
volvement. The water industry has a com~
modity that every single person requires or
needs. This industry, according to Forrest, is
now looking at a yellow caution flag. Infla,
rion throughout this industry is begiruling
to outsrrip the CPI, which could invite additional public sector involvement, as has
happened in the health care industry. This
could mean more regulations and other fonns
of management by the federal and state
governments.
The public sector is replacing the pri~
vate sector rapid ly due to the grow th of
entitlements, or transfer payments. Wel~
fare entitlements in this country have
grown at the rate of 11 .1 % over the last
thirty years. The geometri c growth of the
National Debt has outpaced the economy
two to one over the last twelve years. In
1980, the National Debt was one trillion
dollars, or 37% of the U.S. eco nomy. It is
now fou r tr illion dollars and accounts for
60% of the economy. The deficit is widening, and by 1997, it wi ll be six trillion
do llars and will account for 75% of th e
economy. Interest on the National Debt
is now three hundred billion dollars annually. In 1997, the interest will be four
hundred fifty bi llion dollars. The government does not think that the National
Debt matters, but it does matter, accord~
ing to Forrest, particularly to the private
sector.
TI1e outlook for the economy is good if
we as a nation make some difficult choices
now by continuing the restructuring of the
balance sheers of American businesses and
demanding a slowdown of the National
Debt. If productivity continues to increase
and if market discipline against inflation
continues as it presently is, there will be real
growth to the economy during the last half
of the 90's.
All the Water You Need
The Monday afternoon Business Session
started with a panel discussion on "All the
Water You Need." The moderator for this
panel was J. Richard T ompkins, C hairman
and CEO of Middlesex Water Co. Panel
members were Kenneth Miller, Director of
Water Supply and Treatment of CH2M
Hill; Dr. Kenneth Gordon, Chairman of
the Maine Public Utilities Commission, and
John Palko, Vice President of AUS Consultants. Tompkins kicked in the discussion
by stating that this panel wou ld deal with
the areas of conservation, efficiency, de~
mand side management and least cost plan~
ning.
Tompkins stated that he had recently
heard a simple definition of conservation
and efficiency from Richard Cowart, Chair~
man of the Vermont Public Service Commission. Cowart stated that "Conservation
is doing with less; efficiency is doing more
with less." Miller stated that he thought
that the NA WC definition ofwaterconser~
vation was one of the best he had seen.
NA WC defmes water conservation as "the
application of prudent demand management
strategies to reduce the inefficient use of
water."
Prior to the presentation, panelists had
been asked to write down their defmitions
of conservation, efficiency, financia l~side
management and least cost planning. The
definitions provided are as follows:
Conservation
Gordon: Conservation, at a superficial
level, means using less of the
water source.
M iller:
Water conservation implies
wise use of water with min i ~
mum waste.
Conse rvation is a carefu l
Palko:
systematic protection of resou rces accomplished by elimi~
oating unnecessary usage and
red ucing waste.
Efficiency
Gordon: Diffic ult to define efficiency
around one resource since all
resources must be considered.
M iller:
Efficiency relates to producing
quali ty water for the least cost
with minimum expense, waste
or effort.
Palko:
Efficiency is effective operation
as measured by a comparison of
production with cost.
Demand Side Management
Gordon: Simply put, demand side
man~
Mi ller:
Palko:
agement requires the utility to
be involved in the optimiza~
tion of the customer's opera~
tions concerning water services.
Demand s ide manageme nt
re lates to managing peak hour
and peak day demands of water
util ity customers (domes tic, in ~
dustrial and municipal, agri cul ~
tural).
Demand side management en~
compasses any strategy or pro ~
gram empl oyed by a ut ility to
influe nce the use, or pattern of
use, of its product by its cus~
wmers.
Least Cost Planning
Gordon: Leas t cost planning is the care
with which firms opti mi ze their
supply (and demand side p lanning) in order to ass ure that
utility services are provided at
the lowest possible cost.
Miller:
Least cost planning relates to
water utility planni ng to meet
customer needs with least cost
service solutions.
Palko:
Least cost planning can be
simply a combination of supply~
side and d emand~side options
which creates a resource mix
which reliably meets custom~
ers' short-term and long~term
utility needs at the lowest pos~
sible cost.
Each of the panel members were given
the opportunity to expand on their writ~
ten definitions, and the discussions were
thought~provoking. It was in teresting to
hear how both the political and business
minds view these matters.
SDWA Panel
The second afternoon session addressed
the increasing Safe Drinking Water Act
regulations facing water suppliers nation~
wide. The moderator of th is panel was Jay
Weinhardt of San Jose Water Co. Oth ers
on this panel were James Elder of the
EPA Office of Groundwater a nd Drinking Water; Scott Rubin of the Pennsy lvania Office of Consumer Advocate; Gera ld
Smith of the A merican Water Works Ser~
vice Co., Inc., and Velma Smith of Friends
of the Earth.
(continued on next page)
W INTER 1992
5
Annual Conference l continued
Each pane list gave their impression of
the regul atory compliance of the Safe
Drinking Water Act and the effect of the
cost of implementing these new regulations. Some of the comments were personal opinions and did not always refl ec t
the views or policies of the organization s
the panelists represented.
Jim Elder stated th at this area produced
two questions. First, "Should there be stoppage of the addition of monitoring 25
new con taminants every third year?'l and
second, "Sh ould there be some priority
established to focus on those contaminants having the highest risk?" Elder went
on to explain why these qu estions should
be answered.
Scott Rubin posed a different qu estion
that he considers fundamental: "Should
the Safe Drinking Water Act be considered a public health program or an environmental program ?" His personal opinion is that the Safe Drinking Water Act
should be considered a public health program. The Act is trying to serve two masters, which he believes is not feas ible.
Rubin's comments were well-received and
well-founded. He advocates sound investments to assure safe and reliable water.
Gerald S mith stated that a moratorium
is not needed on drinking water standards; however, stand ards should be prioritized, and drinking water stand ards
sho uld definitely be universal in nature.
R isk should be addressed in order of public health benefits.
Velma Smith stated that she was satisfied with the present Safe Drinking Water Act and could accept no change in
the monitoring prov isions of the A ct. She
contended that there should be some pooling of resources, and cost-sharing measures should be implemented to assist
smaller systems in complying wi th the
Act. She assured eve ryone that there
would be an inevitable increase in the
cost of water rates and that the piper has
to be paid in those communities where it
is necessa ry. Smith is also adamant in her
con tention that radon has to be moni tored in all dri nking water, knOWing full
we ll that the risks of radon in drinking
w~lter are minimal.
Commissioners' Panel
T uesday mo rning's General Business
Session opened with a panel of regulators
6
NAWCWATER
moderated by Illino is Comm issioner Paul
Foran. Commiss ioners Linda Bisson
Stevens of New H ampshire, C harles H.
Hughes of North Caro lina, Patricia
Perkins of Missouri and Dav id E. Ziegner
of Indiana were the panelists that provided their perspectives on a wide range
of curren t issues.
The commissione rs agreed that their
ab ility to fulfill their responsibilities is
enhanced when utilities build meaningful avenues of communication, and that
it is qui te proper to do so whi le observing
caveats on ex parte communications.
In some states there are few forma l
mechanisms for these communications.
Commissioner H ughes suggested quarterly
discussions of industry issues. In Illino is,
commissioners engage daily in informal
contact with utility companies. Commissioner Perkins suggested that active staff
contact can fill voids created by restrictions on commissioners themselves.
Commissioner Ziegner cited a desire to
learn about the implications of federal
legislative mandates and interesting leg;
islative ini tiatives in other states, and
added that utilities may be the best source
for this information. Site visits, such as
plant tours, are a va luable method of commllilication that water utilities should use
more often. Commissioner Ziegner added
that the costs of communicat ion activities need not be a big issue, since informal
(low-cost) communications are preferred.
Commissioner Hughes commented that
utilities should use their NAWC chap ter
and national offices more to alert commissioners to industry issues.
The commissioners agreed that utili;
ties can be informative without lobbying
the commissi o~. A lthough the commissioners agreed that in most cases lobbying
is inappropriate, Commissioner Hughes
remarked that when the goal benefits all
customers and is unrelated to a docketed
case, it is proper for a utility to lobby the
commission .
A li ve ly discussion co ncerned t he
reauthorization of the Safe Drinking Wate r Act and whether a commissioner's
proper role is making policy or si mply
implementing policies.
Commissioner Hughes suggested that a
moratorium be placed on further water
qu ality regulations until more scientific
data are ava ilable. The alternative is that
regulations so severe as to force small wa-
ter companies out of business could induce a proliferat ion of unregulated private wells and hurt the ca use of water
quality. He argued that commissioners
should speak out aga inst bad policy.
Commissioner Ziegner stated the belief that commissioners must implement
legislative policies. Commissioner Perkins
noted that wh ile SDW A has its problems, it may be better to work with flawed
policy and try to reform it than to work
for its to tal repeal. Commissioner Fora n
suggested that regulators have an obligation [0 edu cate legislators when they believe lawmakers are pursuing wrong di rections.
The panel's consensus was that extreme
legislati ve mandates are not good for an yone, and that decisions on water qua li ty
should be science-based, not emotional
or political. Generall y, the panelists beli eve th e water industry is beco min g
riskier, especially for smaller utilities or
those fac ing large ca pital fund ing requirements under SDW A.
Commissioner Perkins said that while
water industry authorized returns once
trailed behind other utili ties, higher returns granted by the late 1980's to water
companies in M issouri began to recogni ze
these higher risks.
Although the U .s. water industry leads
the world in water treatment and quality,
Commissioner Stevens noted that fo rces
from outside the industry have imposed
the perception of higher risk. S he suggested tha t water utilities work for corporate culture changes in how the industry
deals with innovation , the potential for
least-cost planning, etc.
Should water utilities be statutorily re qu ired to meet various planning criteria
that apply to electri c and gas industries,
such as least-cos t planning, mandatory
demand-side management programs and
integrated resource planning? Commissioner S tevens asserted that rather than
mandating certain practices, commissions
should encourage companies to adopt
those they believe are good and prudent
management approaches.
Commissioner Perkins added that pro~
grams should not be imposed without as'
surance of the results and benefits-which
can be difficult to quantify.
Legislative reactions requiring some of
these mea~ures for the electric industry
were prompted by public outrage gener;
ared by rate sh ock in n uclear construc~
tion programs, said Commissioner Foran.
If custom ers ever believe that a company
cares mo re about profits than service, and
that regulators canno t regulate fairly, then
the water industry could expect the "meat~
axe approach to legislation )) that has been
imposed on the electric industry. He noted
that the water ind ustry has generally don e
a good job of communicating needs for
construction and increases, h ence the ab~
sence of public outcry, even in cases involving very steep rate increases. Water
companies must stay in close touch with
th eir communities.
Several commiss ion ers said moves to
automatically require conservation without regard for specific conditions are unwise: Commissioners Ziegner and Foran
stated that with no real water sh ortages
in their states, it makes no sense to require conservation programs across the
board.
\
Commissioner Stevens said that it is a
popular belief that conservat ion is good
for its own sake. Yet New H ampsh ire's
abundant water supply is a competitive
regional advantage, and the commission
wou ld not want to create the opposite
impression. While North Carolina advocates metering and increasing block rate
structures, Commissioner Hughes ech oed
th e opinion that with no water sh ortage,
further conservation measures are unnecessary.
Power-short times taught regulators
ways to usc fi nanc ial incentives for conservation, said Commissioner Steven s.
Even in times of abundant supp ly, to prepare for water-sh ort times, the water industry should learn from practices that
have been successful in the energy field,
including va lu able studies on customers'
response to various motivations and incentives.
W h en conserva tion does curtail revenues, the panelists agreed that the com-
panies should be made whole through
ra tes. Commission er Ziegner cited rate
structures that separate commodity and
consumption charges and automat ic adjustment mechanisms as useful too ls to
add ress conservation-induced re venue
shortfalls.
Practices on commissioners personally
presiding over water cases varied among
the states represented. In North Carolina, a minimum of three of the seven
commissioners preside in every rate case
involving more than $300,000. In Illinois , commissioners never formally preside, although they often informally monitor ev identiary h earings.
Commissioner Ziegner sa id each of the
five Indiana co mmiss ioners specializes in
an industry and at least one tri es to preside over every rate case, even though an
administrative law judge is also assigned.
Com mi ssioner Steven s said New H ampshire believes that cases should be presented to the decision makers. To allow
commiss ioners to manage the ir time, mi crophon es pipe h earing testimo ny into
commiss io ners' offices
Responding to an audience question ,
the panel generally believed commissioners may take advocacy positions with other
regulatory bodies in support of construction permits, programs o r vario us legislati on . Foran said the Illinois commission
often works with oth er state agenc ies at
the st aff level in a coordinated approach
to address safet y or service issues.
Pre-approval of construction plans was
cited by some speakers as a way to reduce
perceived risk on plant construc tio n,
guarding against the pitfalls of "after-thefact prudency." W hile some of the panelists' states allow the practice, oth ers are
still formulating policies. Safeguards are
required to ensure that pre-approval does
not hamper a commission er's ability to
rule objectively at a later time on admissibility of expenses,
After the conclusion of this panel,
C harles A. Buescher, Jr., chairman of
NA WC's Regulatory Relations Committ ee, made a specia l presentation
saluting Commissioner Foran's important
contribution s as ch airman of NARUC's
Water Committee in foc using the regulatory community's attention on water issues.
• Politics is a business where the bottom line is votes. You must respect
the o ther side's issues.
• In any clash between the facts and
votes, the votes will wi n ,
• Not every vote is a vote of conscience.
• Elected officials get information from
the capitol; they get heat from home,
• W h en poli ticians feel the heat, th ey
t end to see the light-so make sure
you're generating enough h eat on issues that are important.
Among 20 practical canons Dowd offered,
h e said, "Face-to-face communications is
more effective than a phone call; a phone
call is better than a lett er .. , and anything beats a petition," And he stressed
that often business leaders fail to use
proven sales techniques in dealing with
elected officials: "Ask for the order; learn
to count; and be a closer. [Senator, h ow
do you plan to vote on this issue? When
do you expect to decide? I'll call you on
that day. W hat information can I provide
you with to help you make your dec ision?]"
Finally, Dowd said, "Remember, th ere
are no friends, only allies in the process.
Never burn a bridge."
Wednesday Presentations
Wednesday mo rning began w ith a session entitled "Opportunity for Investors,"
moderated by George Johnstone, of
American W ater Works Service Co. Pan-
elists were W. R. Elliott of Bechtel Corp.,
Michael D. Basham of Smith Barney and
Wendell E. H olland of the Pennsylvania
Public Utility Commission . Commission er
Holland's presentation is provided beginning on page 18 of this magazine,
Wednesday morning's sessio n was con-
cluded by NAWC's Annual Meeting.
Outgoing Committee C h airmen Gerald
Smith (). J. Barr Scholarship Award ComDowd Presentation
The second morning session on T uesday featured Thomas ] . Dowd, Jr., a former
Connecticut state senator who was o nce
mittee) and David Smeltzer (Rates and
Revenues Committee) were h onored for
their contributions to NA WC as Co m;
employed by Bridgeport Hyd rauli c Co.,
ship was given to Kirk Gavel, a student at
University of No rth Carolina at
who o utlined why executives must know
how the political process works and understand h ow to work effectively in that
arena,
Dowd cited five maxims that executives must follow to successfully lise the
political process:
mittee Chairmen. The J. J. Barr Scho lar-
W ilmington. NAWC Vice President Rich
Tompkins made presen ta tions to winners
of the Management Innovatio n Awards.
More information on t he Management
Innova tio n Compe ti t io n begins on p. 11.
(continued on next page)
W INTER 1992
7
Annual Conference, continued
Wednesday afternoon was devoted to
seminars. Seminar I, by the Public Information Committee, was devoted to "Selling Water Conservation to the Customer,
the Utility and the Reglator." Participants
were Moderator Dick Balocco of San Jose
Water Co., Commissioner Jeremiah F.
O'Connor of the New Jersey Board of
Regulatory Commissioners, Tim Searchinger of the Environmental Defense Fund,
Bruce Adams of the South Florida Water
Management Division, Ken Roed of California Water Service Co. and Fred Meyer
of San Jose Water Co.
The Employee Relations Committee
presented a seminar entitled "Managing
Diversity in the 90's: A Mandate for the
Disabled." The panel was moderated by
Walter Brady of Middlesex Water Co.
Panelists were John Krampf of Morgan,
Lewis & Bockius, Henry Coleman of
Philadelphia Suburban Water Co. and
Jim Robins of General Waterworks Co.
A paper entitled "Summary of Major Provisions of the Americans with Disabilities Act" was prepared and distributed by
John Krampf. If you would like a copy,
please contact Mike Horner at NA WC
Headquarters (202/833-8383).
The Small Companies Seminar addressed several topics of concern for small
companies. Small Companies Committee Chairman John Alexander updated
attendees on the Committees' efforts over
the past year. Jim Grundy, of The Grundy
Agency, discussed insurance issues relating to small companies. Reginald Lindsay
discussed the economic and practical issues raised by the efforts of the town of
Edgartown, MA, to acquire the assets of
Edgartown Water Co. Supplemental information distributed at the seminar on
this issue is available by contacting Mike
Horner at NAWC Headquarters.
The Small Companies Seminar contin-
ued with an update on financing issues. This
discussion was moderated by David Monie
of Logan Wells Water Co. Panelists were
Paul Gioia of First Albany Corp., David
Ash of Ocean Bay Park Water Co., andJ. B.
T rew, II, of CoBank of Denver.
The Conference came to an exciting
conclusion on Wednesday night, with the
Dinner Dance. Following a reception, attendees entered a ballroom featuring a
southern plantation home, an antique carriage, and a stage backdrop that portrayed
a night sky. After a delicious dinner,
NA WC Vice President Rich Tompkins,
accompanied by a fifer and a drummer,
encouraged attendees to attend the 1993
Annual Conference, in Williamsburg,
VA, October 17- 21. Next, attendees were
introduced to The Impressions. The Impressions put on a memorable show, that
had NA WC members on the dance floor
instantaneously. It was a fitting close to
another excellent Annual Conference. ,
Honorary Award Presentation
The following is the soundtrack of a slide
presentation made at NAWC's 1992 Annual Conference to honor NAWC's newest
Honorary Member.
Speaker-Jim LaFrankie, recently retired
President, American Water Works Co.:
"When I learned of the selection of this
year's Honorary Member, I was shocked.
Had the committee lost its senses? The nominee is an individual I've known for some 30
years and have witnessed his poor golf game,
cigar smoking and other numerous disturbing characteristics such as soliciting money
for the political action committee.
"I've spent the last few weeks trying to
convince the selection committee to reconsider their choice. Apparently this individual
knows where the skeletons are buried regarding utility executives. The selection
committee ~as unanimous in its selection
NAWC Chairman of the Board of j . james Barr (r) presents Honorary Member Award to Mike Zihal and his
wife, Dorothy.
8
NAWCWATER
and wouldn't consider changing its choice.
"After exhausting all efforts, I can only
say the nominee and his saintly wife are two
of the nicest people Nancy and I have
known. Let me welcome him into the Honorary Society of NAWC and thank them
both for their many contributions over the
years as we all work to improve the image of
the water utility industry."
Speaker-Bob Morris, former NAWC
Executive Director: "I'm delighted to give
this testimonial to this year's recipient of
honorary membership in NAWe.
"I have known the awardee since my
early days in the waterworks business. We
both started at the same time and our paths
paralleled each other as we progressed
through our careers.
"I first met him at the bar following a
conference meeting and we had a lively
discussion, as you always could with him,
into the wee hours of the morning. As most
of you know I had the privilege of serving as
Executive Director ofNAWC for an 8 year
period in the late 1970's and early 1980's. It
was during this time that I had the opportunity to work closely with the representatives of member companies, particularly
those who served as President of the Association.
"Also you will remember this was the
time when the association was actively seeking amendments to the Safe Drinking Water Act and our activity on Capitol Hill
heightened considerably. This year's honorary member played an active role in this
process. He spent countless hours in Washington trying to accomplish the goals of the
association. I will never forget his participation in the frustrating discussions with the
ultra-liberal groups in the House espousing
Representative Henry Waxman, nor will I
ever forget the love affair he developed with
the extreme opposition of those with whom
we were negotiating our position. To the
right was the very conservative Anne
Gorsuch Burford and on the left was the
ultra liberal Jackie Warren. How he was
able to keep his composure is still a wonderment to me. I've known and admired this
awardee for a good many years and I'm delighted with his selection. He richly deserves this great honor."
Speaker-Chet Ring, former President,
Elizabethtown Water Co.: "He was highly
respected as a heavy hitter in utility management, engineering and government affairs. He's also a heavy hitter on the golf
course, but rarely knows where the ball is
going."
Speaker-Dorothy Zihal: "I'm the awardee's
better half. Can you imagine a farmer's daughter from the midwest marrying a big city Brooklyn boy. We were working at the Collegiate
Cap and Gown Co. in Champaign, Illinois,
and my boss said the marriage would never last.
But we proved him wrong by celebrating 41
years of marriage.
"I have been very fortunate to be part of
his work in the water industry all these
years. I'm proud that NAWC has selected
him for this recognition. He's demonstrated
a dedication for his family as well as for his
work and successfully balanced both over
the years, marking for a happy transition
into our retirement life."
Speaker- Charles Buescher, Executive
Vice President, Continental Water Co.:
"This year's Honorary Member likes to refer
to h imself as a country boy. I first met this
country boy over 30 years ago when he was
revisiting the home of the University of
Illinois in Champaign from the Big Apple.
It was winter and I was the engineer in
charge of a new water plant being built. I
was told to take this visitor on a tour of the
construction site. As we were touring the
new plant we were climbing up a steep snow
NAWC Honorary Members and their spouses were recognized at the Annual Conference.
covered embankment when I noticed a commotion as our honoree slid down the snow
covered hill. I found that the country boy
has been in the big city too long and forgot
about winters in Illinois.
"All kidding aside, I have worked with
our honoree very closely during the last 15
years and can say that he has provided leadership wherever he has been, whether it was
within his utility, his community, or the
various national and state water organizations with which he was associated. This
year's honoree helped focus and lead their
endeavors to meet their goals and this has
been true with his long relationship with
NAWC."
Speaker-Jim Barr, NAWC Chairman
of the Board and Senior Vice President,
American Water Works Co.: "My early recollection of this year's Honorary Member
precedes meeting him. I'd just assumed the
manager's position of New Jersey American's
Monmouth County operations in the early
1970's. We were about to undertake union
contract negotiations with the Utility W orkers Union. People in New Jersey told me we
had to talk to a guy in New York before we
started. Even John Wynn, president of the
union, wanted to know if I had talked with
him.
"I learned early on that there was a person on Long Island who had made an impact on the water utility industry. Somehow
he had found a way to overcome his shy and
retiring personality.
"In later years I watched him in Washington work with congressional committees
representing NAWc. He just loved to walk
up to a particularly aggressive staffer and put
his arm around him and explain that he was
just a country boy who happened to be from
New York who was there to help Congress
do its job. All he wanted to do, he would
explain, was to keep the staff from making a
big mistake.
"Always with a sparkle in his eye and just
a touch of devil in his approach, he dared to
do things others backed away from. Yet he'd
be the first to admit with a hearty laugh that
things did not quite work out the way he
expected. Meet his wife and you know the
one person who can tell him with just a look
to sit down and shut up and he does it, and
that's just one of the reasons they're such a
great team.
"In the NFL, they would have called him
an impact player. In NAWC we call him an
Honorary Member."
Speaker-Lou Mirando, President, Long
Island Water Co.: "By now, yo~ know who
the "Country Boy" is. He's my predecessor,
Mike Zihal. Mike's career at Long Island
Water Corporation spanned 35 years when
he retired in 1991.
"This extraordinary man's life began in
Lower Manhattan where he was born, then
shifted to Brooklyn where he was raised.
During World War II, he served in the U.S.
Army in the Philippines, then attended the
University of Illinois on the GJ. Bill of
Rights where he received a degree in civil
and sanitary engineering.
"It was there in Illinois that Mike met
Dorothy, his wife of many years. After Mike
graduated, he worked as an engineer for the
City of Freeport, Illinois, and then joined
Northern Illinois Water Corp. In 1956, he
returned to the New York area when he
joined Long Island Water Corporation as
head of the Engineering Department. Subsequently, he was made chief engineer and
assistant general manager, then vice president and general manager. In 1975, he was
named president.
"Everything you've heard about him today from his wife, friends and associates is a
true accounting of Mike's impressive career.
"Michael Zihal, on behalf of the many
friends you have here today, and those you
have made through the years, congratulations on being named NAWC's Honorary
Member for 1992." ,
WINTER 1992
9
•
Presentation of J. J. Barr
Scholarship Award
by Gerald C. Smith, Chairman,
j. j. Barr Scholarship Committee
at the 7992 NAWC Annual Meeting,
National Association of Water Companies
Good morning. There are a few of us
here this morning who have been around
long enough to really appreciate what
NAWC has grown to become today, because we can clearly recall its beginnings.
I am referring to the early 1960's-the
formative years of the Association. One
individual who was instrumental in this
Association during those years-and
someone to whom we owe an enormous
debt of gratitude for his tireless work and
astute guidance-is J. J. Barr, former President and Chief Executive Officer of the
American Water Works Company.
Mr. Barr served as Chairman of the
Board of the Association until 1974. He
took office at the time NAWC was formed
by the merger of two other organizationsthe Pennsylvania Water Companies' Conference and the Eastern Water Companies' Conference. He was very active in
both these organizations, and it was because of his vision that they were merged
into one strong, clear voice for the national community of investor-owned water utility companies.
In memory of J. J. Barr, each year at the
Annual Conference, NAWC awards a
scholarship to a junior, senior or graduate
student from an educational institution
in the vicinity of the conference city.
The purpose of the award is to make
the student aware of the potential of a
rewarding career in the investor-owned
water utility business and to recognize
achievement in scholarship, leadershippotential, initiative and promise. The
Award consists of a check in the amount
of $2,500 and a certificate.
10
NAWCWATER
I would like to take a moment to acknowledge the other members of the 1992
J. J. Barr Scholarship Committee and to
thank them for their efforts. They are:
Bud Stump of California Water Service
Co., San Jose, CAj Tom Cawley of
Elizabethtown Water Co., Westfield, NJj
and Ronald Dungan of General Waterworks Co., King of Prussia, PA. Thank
you, gentlemen, for your fine work.
This year, seven colleges and universities were contacted by the Scholarship
Committee and invited to select their
most qualified candidate with interests
closely matching those of the scholarship
requirements. This resulted in five outstanding candidates, each with impres-
sive credentials and each a real credit to
his or her institution.
Ladies and gentlemen, as most of you
know, I have been involved with the selection process for this award for the past
several years. Let me assure you that each
year I am more and more impressed with
these young people. Each year the Committee has a difficult decision to make.
Fortunately for us, each year there seems
to be one student candidate who stands
out from the others, exceptional as their
credentials may be.
This one candidate is distinguishable
by a multitude of small factors that sets
him or her apart. This year is no exception, and as a result I have the pleasure to
Gerald C. Smith (I) presents J.j. Barr Scholarship Award to Kirk Gavel.
announce that the winner of this year's J.
J. Barr Scholarship is Mr. Kirk Gavel from
the University of North Carolina at Charlotte (UNCC).
Kirk holds a Bachelor of Arts Degree in
Economics from Davidson College in
Davidson, North Carolina. But he was
unfulfilled working in finance and so he
returned to school in 1989 to study civil
engineering. He is now a senior at UNCC,
with a 3.88 grade point average.
This Fall, Kirk is both an undergraduate and graduate student at UNCC. Kirk's
graduate work will focus on water resources engineering. As his senior design
project, he plans to construct a water filter model for use in the introductory environmental engineering lab where he will
be employed as a graduate assistant. Kirk
plans to seek employment with a consulting firm in the Greater Charlotte area,
and complete his Master's Degree on a
part-time basis.
It is Kirk's ultimate desire to establish
an engineering consulting firm specializing in water treatment design. These are
lofty goals for any student, but the Scholarship Committee was just as impressed
by the letters of recommendation about
Kirk by the UNCC faculty.
Dr. David Bayer, professor of Civil Engineering, wrote: "Kirk Gavel is the best
all around student I have ever had ... "
Since Dr. Bayer has taught for over 25
years, I think you will agree this is indeed
an impressive recommendation. Dr. Bayer
goes on to say Kirk is "The best at oral
presentations ... one of the best at written reports ... and he possesses 'common
sense,' which is the single most important
asset an engineer can have."
Helene Hilger, an instructor in the Department of Civil Engineering, told us, "I
suspect much of Kirk's motivation and
direction come from the fact that he has a
sense of purpose. He is financing his education himself, and he has made a conscious decision to sacrifice in order to
earn his engineering degree." She goes on
to say, "He is a relaxed, sociable, unassuming fellow, well liked by the faculty
and his peers. He is viewed by his classmates as someone who always knows what
is going on and who will willingly extend
himself to explain a difficult concept. He
does not have a competitive attitude about
his success. He sets his own goals and is
led to perform accordingly .. . The fact
that he is bright, diligent and a good team
player should lead to success for him professionally. I recommend him to you without reservation."
Ladies and gentlemen, now that I have
had the opportunity to meet Kirk Gavel
personally and spend some time talking with
him, I am even more confident that this
young man epitomizes the highest standards
of the J. J. Barr Scholarship. Kirk is intelligent and has the determination to succeed
in life. Kirk, it is my pleasure to present you
with this certificate and a check for $2500.
Congratulations! ~
Managetnent Innovation Contest
This year, there were 13 entries in
NAW C's Management Innovation Contest. Winners were selected by a committee
comprised of J. Richard Tompkins of
Middlesex Water Co., Jack McGregor of
Bridgeport Hydraulic Co. and Ronald
Dungan of General Waterworks Co. The
committee selected three first prize winners.
New Jersey-American Water Co. won
for its project "Utility Partnership Reduces
Operating Costs." This was submitted by
Daniel Kelleher. Bridgeport Hydraulic Co.
won for its project "Take the BHC Inventory Plunge," submitted by Twig Holland.
Citizens' Utilities Co. of Illinois won for its
project, "Quantitative Customer Service
Perception Measurement on an Ongoing
Cost-Effective Basis." This was submitted
by William Kuzia.
A list of all entries submitted follows. If
you are interested in receiving copies of
(continuned, next page)
j. Richard Tompkins (/) presents Management Innovation Award to Daniel Kelleher of New jersey-American
Water Co.
WINTER 1992
11
•
Management Innovation, continued
any of the entries, please send a list, by
number, of the entries that you would
like to Mike Horner, NA WC, 1725 K
St., N.W., Ste. 1212, Washington, DC
20006.
I. Be Winter Wise
PA-American Water Co.
submitted by Margaret Philbin
2. Learning Efficiency through
Advanced Procedures
Missouri Cities Water Co.
submitted by Lynn Bultman
3. Quantitative Customer Service
Measurement on an Ongoing, CostEffective Basis
Citizens Utilities Co. of IL
submitted by William Kuzia
4. Hold the Line Campaign
Westpac Utilities
submitted by Charles Fletcher
j. Richard Tompkins (I) presents Management Innovation Award to janet Hansen of Bridgeport Hydraulic
Co.
5. Blending Water to Meet Drought
Water Resource Needs
Westpac Utilities
submitted by Charles Fletcher
6. In-House Video Training
Lake View Park Water Works
submitted by Michael Baker
7. Innovative Management Through
Postal Service Cooperation
California Water Service Co.
submitted by Ray Worrell
8. Water Conservation Rangers
Hazardville Water Co.
submitted by Steve Klobokowski
9. Leak Detection Program
Southern California Water Co.
submitted by Joseph F. Young
10. Take the BHC Inventory Plunge
Bridgeport Hydraulic Co.
submitted by Twig Holland
II. Wellness Program
Indiana-American Water Co., Inc.
submitted by Cheryl Chalfant
12. Water is Precious
New Jersey-American Water Co.
submitted by Daniel Kelleher
13. Utility Partnership Reduces
Operating Costs
New Jersey-American Water Co.
submitted by Daniel Kelleher ~
12
NAWCWATER
j . Richard Tompkins (I) presents Management Innovation Award to Ronald Walsh of Citizen's Utilities.
NAWC Board of Directors
II
Maurice L. Arel
Pelmichuck Water Works, Inc.
Peter L. Haynes
Consumers Water Company
Robert H. Nicholson
San Gabriel Valley Water Co.
David Ash
Ocean Bay Park Water Corp.
William D. Holmes
Consumers Water Company
Eugene H. Owen
Baton Rouge Water Works Co.
1· 1ames Barr
American Water Works Svc. Co.
Donald L. Houck
Califomia Water Service Co.
Utilities, Inc.
C harles A. Buescher
George W. Johnstone
Continental Water Company
American Water Works Svc. Co.
Bert T. Phillips
Topeka Group
Thomas J. Cawley
Elizabethtown Water Company
Robert E. Johnstone
General Waterworks Company
Michael O. Qu inn
Suburban Water Systems
David E. Chardavoyne
lamaic. Water Supply Co.
David R. Kaufm.n
Pennsylvania Gas & Water Co.
Philip G. Seges
Westpac Utilities Co.
Marshall T. C hiaraluce
Connecticut Water Co.
Daniel L. Kelleher
American Water Works Svc. Co.
Gerald C. Smith
American Water Works Svc. Co.
Donald L. Correll
Hackensack Water Company
Edward W. Limbach
American Water Works Svc. Co.
C harles H. Stump
California Water Service Co.
Robert A. Dolson
Continental W ater Company
Robert A. Luksa
Philadelphia Suburban Wtr. Co.
Ronald S. Dungan
General Waterworks Company
James S. Mclnemey
Bridgeport Hydraulic Company
Citizens Utilities Company
Robert B. Gordon
Avatar Utilities,lnc.
David Monie
Logan Wells Water Company
lay w. Weinhardt
San lose Water Company
Martha C. Green
Hackensack Water Company
lames T. Morris
Indianapolis Water Company
Floyd E. Wicks
Southern Califomia Water Co.
Perry B. Owens
1. Richard T ompkins
Middlesex Water Company
Ronald E. Walsh
WINTER 1992
13
1992 Conference:
The Capitol Steps provided a little levity to open up the Conference.
The Honorable Paul Foran (Illinois Commerce Commission) moderated the
Commissioner's Panel.
The Honorable Kenneth Gordon (Maine Public Utilities
Commission), NARUC President, provided a message from
NARUC.
14
NAWCWATER
Robert Reinert (Malcolm Pirnie, Inc.), AWWA President-elect, provided a
greeting from AWWA.
Pictorial Review
The Honorable Wendell E. Holland (Pennsylvania Public Utility Commission), a participant
on the Opportunity for Investors Panel.
Th e Honorable Charles H. Hughes (North Carolina Utilities
Commission) participated in the Commissioner's Panel.
PartiCipants in the Small Companies Seminar (clockwise from center, top): David Monie
(Logan Wells Water Co.), j.B. Trew, " (CoBank of Denver), David Ash (Ocean Bay Park
Water Co.), and Paul Gioia (First Albany Corp.).
OutgOing NAWC President jay W. Weinhardt (San jose Water
Co.) turns the gavel over to Incoming President William D.
Holmes (Consumers Water Co.).
Participants in Selling Water Conservation to the Customer, the Utility and the Regulator
Seminar (I to r): Bruce Adams (South Florida Water Management Division), Fred Meyer (San
jose Water Co.), jeremiah O'Connor (New jersey Board of Regulatory Commissioners), Timothy
Searchinger (Environmental Defense Fund), and Ken Roed (California Water Service Co.).
WINTER 1992
15
Outgoing NAWC President jay Weinhardt congratulates outgoing j.j. Barr Scholarship Committee
Chairman Gerald C. Smith (American Water Works Service Co.) on a job well done.
GER
The Honorable David E. Ziegner (Indiana Utility
Regulatory Commission), a participant on the
Commissioner's Panel.
The Honorable Patricia Perkins (Missouri Public Service
Commission), a participant on the Commissioner's Panel.
16
NAWCWATER
Participants on the All the Water You Need Panel (I to r): john Palko (AUS Consultants), The
Honorable Kenneth Gordon (Maine Public Utilities Commission), Kenneth Miller (CH2M Hill) and
j. Richard Tompkins (Middlesex Water Co.).
Participants on the Technical and Environmental Regulation Horizons Panel (I to r): Velma
Smith (Friends of the Earth), Gerald Smith (American Water Works Service Co.), Scott
Rubin (Pennsylvania Office of Consumer Advocate), jim Elder (EPA Office of Groundwater
and Drinking Water), and jay Weinhardt (San jose Water Co.).
Opening day speaker Keith Forrest (Unum Life Insurance Co.).
The Honorable Linda G. Stevens (New Hampshire Public Utilities Commission), a
participant on the Commissioner's Panel.
The Impressions helped attendees end the Conference on a
harmonious note.
Incoming NAWC President William D. Holmes (I) presents a token of appreciation to outgoing
President jay W. Weinhardt.
WINTER 1992
17
Opportunities
for Investors
by Wendell F. Holland
Commissioner, Pennsylvania Public Utility Commission
presented at the NAWC Annuol Conference, 1992
"Where there is no vision the people perish. n
(Proverbs 29:18)
Former chairman of the Pennsylvania
Public Utility Commission Bill Shane delivered those remarks last week before a
packed (stand ing room only), excitable
crowd during a public input hearing on a
case determining whether an electric utility
may construct a half billion dollar transmission electric line that would transverse the
vantages, strengthen our infrastructure
and make our economy attractive ....
We can only grow by building upon
our competitive strengths. AblUldant
energy resources, vast suppli es of water, prime sites for industrial and com~
mercial development and a strategic
location are the competitive advan~
tages of Pennsylvania.
state.
Then, he continued to add ress the need
for improvement in infrastructure by fur~
ther stating th at:
I have a vision of Pennsylvan ia with its
abundant energy and water resources
as the eastern industrial~technical hub
of the 2 1st Century. I see the lemmings leaving the water parched Sun
Belt returning to the Appalachian
G reen Belt early in the 21st Century.
Water and energy are ou r trump cards
for the future. We must seize opportu~
nilies to exercise our competitive ad~
18
NAWCWATER
Policymakers should be deeply committed to the development of infra~
structure which makes [us] economi~
cally competitive. Regulation [should]
strongly promote the development of
new markets for [water and] energy.
His statement talks of improving our in~
frastructure to deliver a fundamental utili ty
service and the attendant opportunities and
risks for the investor, regulator and
ratepayer.' As Bill Elliot has drawn a parallel between the electric and water utilities, I
believe the fanner chairman's remarks tie in
well with this morning's panel discussion. If
we are going to improve our water infra~
structure, regulators should be mindful of
the opportuni ties for investors, and we must
act.
In his opening remarks, George Johnstone
spoke of the public/private partnership that
could be formed to upgrade large water systems. I will address that issue.
Me. Johnstone recounted the story of the
Orrstown BoroughAuthority who was look~
ing to the Shippensburg Borough Authority
as a savior to resolve its overwhehning prob~
lems.
Did the adjacent system agree to solve
the problem? From all aCCOlmrs, not yet.
Unfortunately, or fortunately in the eyes of
some, the Pennsylvania Commission does
not have jurisdiction over this case as it
involves two municipal authorities. More
importantly, this scenario raises three re~
lated issues.
First, it raises the question of privatization.
The privatization approach can fit in neatly
with Pennsylvan ia's need to increase irs
rcgionalization of drinking water providers.
Whether privatization takes place in the
form of an experienced investor-owned water utility purchasing a troubled municipal
wa ter system outright, or whether a service
contract is the chosen methoo, either can
resolve the customers' service woes permanently. In Pennsylvania, there are many
opportunities for the investor for this type if
privatization. So too are the opportuni ties
for vastly improved economies of scale, along
with markedly improved water service for
customers whose options are likely to be
very limited otherwise. Here again, regulators may require a degree of creative thinking, but I believe privatization holds tremendous prom ise provided the appropriate
contractual safeguards are implemented.
Second, the scenario again asks when we
should apply our newly-enacted mandatory
takeover legislation. Enacted in April of
this year, Pennsylvania's mandatory takeover legislation aggressively addresses the
proliferation of troubled small water utilities
that are incapable of or unwilling to render
safe and adequate selVice to their custom-ers. Patterned after similar legislation in New
Jersey and Connecticut, the framers intended
the statute to act as a deterrent to recalcitrant owners who blatantly refuse to comply
with orders by economic or environmental
regulators. It is a measure oflast resort. Mr.
Johnstone's case study is an ineligible candidate, as we lack jurisdiction over the authority. However, we keep a keen watch
over our troubled water companies and "anxiOllsly" await the first test case.
TI,ird, the average annual bill for these
customers of Orrstown Borough is $168. At
$ 14 a month, rhis can be compared to the
$20 or $30 we pay for monthly cable TV
service. Which service is more essential?
Further, compare the Borough's rates to the
statewide average of $260, and at the same
time recall that several water companies
charge well over $300 annually. Customers
should understand that high quality water
that meets federal and state standards comes
with a price.
Rura l, or small, water systems are not the
only systems facing challenges. Water systems serving large cities or their sprawling
suburbs face comparable challenges. As
George stated, "many [big city water] systems need new treatment plants and/or plant
upgrades." He con tinued that any public
agency program designed to upgrade plant
will require safeguards-whether regulated
or contractual-which should include provisions such as;
1. Long--term co mm itments and, if regulated, the inclusion of special provisions th at bind future commissions
to create a non-revocable revenue
stream;
2. Long-term cap ital prov ided by th e
private sector which will be secured
by the reven ue stream begi nning
when the project is comp leted and
prov id ing proper se rvi ce; and
3. The cons tru ction loan will be tied to
guarantees that th e project will be
constructed and placed into service
within budget and on time.
I wholly and emphatically agree with his
observations. However, I wi ll only comment on the binding effect on futu re commissions and loan guarantees.
First, it is important that any transaction
that is intended to bind future commissions
be carefully crafted. Let me explain. [n my
early days as a prosecutor, one of my colleagues remarked that utility law is a "living
law": it constantly changes. Years la ter, I
heard the same concept from a commissioner but phrased differently-namely,
"regulatory policies change as Commission-ers change: don't expect me to be bound by
what some prior Commission did."
T o be sure, that last comment is arguably
regulation at its worst. Indeed, it creates an
unfair movi ng target for the regulated communi ty.
Second, let's talk about "guarantees that
the project will be constructed and placed
into service 'within budget and on time.'"
Bill Elliot drew the analogy between the
maj or construction programs in the electric
and water utility industries. TIlere are a few
observations that I too wou ld like to make.
First, I hope we can all work together to
avoid the difficulties that the regulatory com~
munity experienced in the electric industry
during the '80s. S horeham , Seabrook,
W.l-l.O.O.P.S. and Limerick Nuclear Construction Projects should be case studies on
what not to do. Coverage ratios, AFUDC,
CWIP and "risk" itself, (business, financial
and regulatory) took on new or strained
meanings in the complex proceedings that
grew from these construction projects. What
was "within budget and on time?"
As a special assistant at the New York
Commission, I was assigned to Niagara
Mohawk Power Corporation's Nine Mile 2
N uclear Unit rate case. T o make a long
story short, in hindsight it seems that there
were just as many extensions as there were
guarantees that the project would be con~
structed and placed into service within bud~
get and on time.
On a larger scale, cost overruns became
an enormously expensive ordeal for the electric industry as "$13 billion in plant invest~
ment> we re disallowed from 1984 to 1988,
representing about 14% of the total capital
costs for these (mostly nuclear) plants."
(Naill & Dudley IPP Leveraged Financing:
Unfair Advantage, Public Utili ties Fortnightly, January 15 , 1992 at 17). 1 re iterate,
1sincerely hope that regulators and the wa~
ter utility industry can work cooperatively
to avoid a similar experience.
While we are drawing parallels between
the two industries, it is obvious that environmental exposure is a very important is~
sue in both industries. O ne commentator
contrasted rhe resulting financial stress as
follows:
Unlike the C lean Air Act's impact on
a select number of electric uti lities, the
SDWA requires virtually the entire
industry to improve existing treatment
and related facilities. This will result in
significant capital add itions on top of
already escalating spending on [improving] distribution infrastructure. Financing these large rate~base additionswhich are nonrevenue-producing assets-will be difficult. Internal cash
generation is weak, with low deprecia~
tion rates (usually about 2% versus
around 3% for electric utilities), and
low authorized return on equi ty. As a
result, dependence on external financing and rate relief requirements will
intensify.
Moreover, low authorized return may affect the industry's ability to attract neces-sary capital to develop new water supplies
and upgrade the quality of existing supplies.
Regulatory Concerns
Poor internal cash generation along with
modest demand growth of under 1% wi ll
require state utility regu lators to play an
even more significant role in the future fj-nancial well-being of rhe industry. Traditional rate~making policy has not provided
sufficient credit support during the construc(continued on nexl page)
W INTER 1992
19
Opportunities, continued
t ion cycle of the electric industry over the
past 15 years. To avoid a repeat in the water
industry, regulators must be aware of the
increased challenges the industry faces. With
large rate~base additions, along with increas~
ing non~revenue~prcx:Jucing assets to meet
future and current water needs and man~
dated water quality standards, regulators will
need to implement innovative regulatory
policy to allow for reasonable financial protection measures. (Bilardello, Leung. Water
UtiUty Benchmarks Revised, Standard & Poor's
C reditweek, May 25, 1992, pp. 48, 49)
Second, while the projects may be co m~
pieted timely and within budget, the amount
of the attendant rate request and relief may
place regulators on the horns of a dilemma.
Phrased differently, improvements to water
systems-large, medium or small-brought
about by the SOWA or other factors may
result in rate spikes and shocks even though
the projects are timely and within budget.
Triple digit rate increases for large systems
are a reality. Just about two years ago, one of
our large jurisdictional utilities sought a
185% rate increase, essentially for major
improvements that were completed timely,
within budget and in response to regu latory
mandates. The parties-including the public advocates-agreed to a 105% increase,
which the commission granted and heard
the expected public outcry. The same utility
has recently filed for a 235% increase for
improvements to another filtration plant
that was timely, within budget and in response to regulatory mandates.
In response to this dilemma, that same
commentator believes that management
could playa significant role in resolving this
problem:
Water utility management must do its
part by continuing to aggressively file
for timely rate reHef so that the finan~
cial profiles of their utilities are not
negatively affected by regulatory lag.
Moreover, management must continue
to educate the public and regulators
about the whole range of challenges
facing the water industry.
Beyond these steps, it is even more
important for management to position
thei r uti lities financially by maintain~
ing reasonable capital structures during the construction phase to limit fi nanc ial deterioration. This will he lp
20
NAWCWATER
utilities maintain their financial pro~
files in line with S&P's revised benchmark guidelines and may prevent credit
qua lity erosion. (Bilardello, Leung.
Water Utility Benchmarks Revised, Standard & Poor's Creditweek, May 25 ,
1992, pp.48,49)
I stress the public education role. uAs
rates continue to rise, we can expect more
customer [particularly large volume industrial users] and political involvement in the
rate-setting process as water bills become
more significant portions of household and
business budgets. The increased in volve~
ment in the rate-setting process will lead to
new and innovative rate structures that try
to meet the sometimes conflicting goals of
various interest groups." (Russell, Woodcock, C.P.M., What Wiu Water Rates BeLike
in the 1990's, AWW A Journal, Sept. 1992)
T o quell the consumer activism which
may ultimately lead to increased business
fmancial and regulatory ri sk, it has been
suggested that utilities:
Develop a public relations campaign
for all rate increases. It should include
early and frequent warnings to CllS~
tomers concerning needed changesj in~
formation releases to all media to explain the need for the increase, what
will change, and how it will affect individua l customerSi and provisions for
implementation and customer assis~
tance throughout the trans ition.
(Russell, Woodcock, C.P.M., What Will
Water Rates Be Like in the 1990's,
A WWA Journal, Sept. 1992)
Most importantly, the public should know
that improving the infrastructure means jobs.
It is a concept that is not often bandied
about in the debate over improving our
water systems. However, from my exposure
to the 20 or so public input hearings that I
have attended on the multi-million dollar
trarumission line case that I alluded to ear~
lier, I sense a strong sentiment that the
public- particularly ratepayers and legislators-want something in return for higher
utility costs. Jobs, or the prospect of employment, particularly in rust belt states or areas
hardest hit by the recession, could be that
quid pro quo.
As we are talking of opportunities for
investors, let me say a word about Project
Financing. Project Financing is ne ither gcxxl
nor bad: you must apply it to the specific; of
the case. I am told that the goi ng theme in
the financial community is the "D" word,
de-leveraging-i.e., bringing debt/equity ratios back into more of a balance, redUcing
debt and increasing equity. Nowadays, rating agencies closely scrutinize project
financings in both the electric and water
industries. There are two characteristics of
project fmancing-namely: 1. Extraordinar~
ily high debt leveraging (although some savings are produced) and 2. T mnsfer of risk.
Regulators should not reject project fmanc~
ing outright in these de~leveraging days.
To be sure, Uin the aftermath of the fi~
nancial impropriety of the 1980's, leverage
is a bad word. But any analogies between
the leveraged project financings [affecting
the utility] industry and unstable industries
which have been devastated by extraordinary debt burdens are facile and invalid."
(Naill, Dudley, IPP Leveraged Financing:
Unfair Advantage?, Public Utilities Fortnightl y, Jan. 15, 1992 at 18)
Regu lators should consider the many in~
ter-related factors which include a sure rev~
enue stream-such as the customers of a
municipal system-and a proven designcontractor with, as Bill Elliot says, uA his~
tory of successful work and a long term
financial strength to back up the guaran~
tees."
In closing, I refer again to the remarks of
the fonner chainnan as he spoke of risk,
improving our infrastructure and opportu ~
nities for investors:
In debating the future, we can be grateful that we are planning for opportunity. We should not allow exaggerated
perceptions of risk to make us fearful of
the future. The financial management
books defme risk as variability. Change
is [unsettling] to all of LIS. We must
define reasonable risk and act. Otherwise we are paralyzed by every real and
imagined fear and might as well assume a fe tal position and let the world
go away.2
lThis author merely recasts the testimo ny ofMr. Shane.
111is recital should not be construeJ. nor is intended.
[Q be an endorsement of these comment... or to sup"'
port any issue in the proceedings in which thc tcstimony was given : nor should it have a bt..>aring o n the
outco me of the proceeding in whic h this testimony
was given.
Triumph Out of Chaos
A Chronicle of the Breach in the
Indianapolis Water Company Canal
by james W. Shaffer
Consultant, IWC Resources Corp.
T he Storm
"Showtime"- Wednesday, lune 17, 1992.
Approxi mately 11:30PM.
Admission was free, but by the time the
curta in fell on Mother Nature's fury much
of Central Indiana, Indianapolis in particu~
1ar, would pay a significant price for the
complimentary production.
The area certainly had experienced its
share of severe rhundersmrms and assorted
weather-related episodes in the past. The
intens ity of this storm's driving rain, clapping thunder, and howling wind; its spectacu lar lightning show) were effects even
most life-long Indianapolis natives had difficulty comparing to past "Act> of God."
The storm became downright insulting.
Even the duck population must have noted
the rain rolling off their backs may have
established a new precedent. Survival during this blast became difficult for any crea~
ture without access to some remnant of a
shelter. Monsoon? Tidal wave? Hurricane?
T a m ado? These descriptions certainly came
to mind, although the latter was believed
the only one previously experienced or pos~
sible in America's heartland.
Severe thunderstorm? While the wcath~
ennen groped to classify it, the brlUlt of the
storm's ugly head quit rearing at approxi~
mately 12:15AM Thursday, lune 18. The
violence that had tra.nscended the previous
night calmed to an acceptable thunderstorm.
If one's nerves were not totally frayed and
no evidence of property damage existed, the
thought of returning to bed appealed to
most citizens.
The Aftermath
Dawn brought the familiar "calm after
the storm." The devastation was obvious as
Ind ianapolis began its daily bustle. The damage bypassed the fortunate, who perhaps
experienced only downed minor tree limbs.
The unfortunate confronted toppled trees
and power lines, loss of power, flooding,
damage to their homes or businesses. All in
all, the metropolitan area was extremely
blessed that injuries were minimal and the
storm caused no reported loss of human
lives.
Trees were uprooted everywhere. An es~
t imated 5,000 to 10,000 trees were damaged
or destroyed on ci ty streets and parks prop~
erty, accordin g [0 an Indianapolis Parks and
Recreation Deparnnent official.
Indianapolis Water Company (IWC) officials later speculated a large tree in the
earthen bank of it> 8.8mile water canallikcly
was becoming unrooted due to the storm.
Further speculation wou ld surmise other
felled trees, debris and surging water hastened the erosion process where the tree
eventually toppled. The canal's integrity had
withstood Mother Nature's and man's as~
sorted challenges fo r more than a century~
and-a-half.
The faithful diversion from the White
River supplies the IWC's water treatment
plant> with 70 to 80 million gallons of water
da ily, or approximately 60 percent of the
city's consumption. It is the backbone, the
major resource from which the IWC sup,
plies its nearly 210,000 customers with di~
versifted water requirements. With this v i~
tal artery becoming totally paralyzed, so too
would the city's water supply if swift action
had not eruued by the Indianapol is Water
Company, numerous city, COlUlty and state
agencies, and private contractors.
Despite continual monitoring by the
IWC, the breach was not a total surprise
considering the man~made canal had en~
durcd a colorful and somewhat con trover,
sial past. It had served Indianapolis since
1836 after construction by the State ofIndiana as part of an intrastate water system
which never developed. The canal was ac~
quired in 1871 by the W ater Works Company of Indianapolis, a predecessor to the
IWe.
Canal Heritage
For nearly 160 years, the ca nal h ad
survi ved criticism during numerous eras
in the growth of Indianapo lis. Its storied
past includes several ownership transac~
tions, a dispute over righ ts to sell canal
ice formed during winter months, and
company stockho lders being indicted for
rnaintainence of a public "nuisance" in
the late 1800s. It also served as a recre~
at ion al haven for boa t rides on lazy Sun~
day summer afternoons durin g
Indianapolis's "Go lden Years" of rile 1880s
and 1890s. A beautiful park on ce graced
its banks near wh ere the breach occurred,
today the site of Butler University. Under
a court order in 188 1, th e Water Wo rks
Co mpany of Indianapo lis was sold to pre~
decessors of the current IWC .
The canal's banks had suffered some difficulties early in its history, but none in mod,
em times had affected today's sophisticated
water treatment and purification procedures.
The prospect has always concerned 1WC
offkials, whose strategic plans include phas~
ing out dependence on the canal for much
of the city's water supply. The breach which
was developing in the canal bank soon pre~
sentL-ci the company with one of the great~
est challenges in its storied history.
tlWe recognize the important role the
canal plays and that is one reason we con~
tinually monitor its level," said Joseph R.
Broyles, president and 27 ~year veteran of
the Indianapolis W ater Company. UA canal
fail ure is something everyone cOfmected with
m e company is always concerned about be~
causc of a commitment to provide uninter,
ruptcd water service to our customers."
(continued on next page)
WINTER 1992
21
Triumph, continued
Discovery of Breach
O n Friday, June 19, nearly 30 hours after
the storm had subsided, lWe employee
Roger Edlin was conducting his normal earlymorning responsibilities monitoring the
White River Station treatment plant on
the city's northside when he noticed a slight
reduction in the water level of the canal.
These fluctuations are normally caused by
the lWC's ''headgates'' that control the flow
of water into the canal from the White
River located several miles north in me
quaint Broad Ripple Village area.
By 5:00AM, the gauge continued to
plummet. Another Iwe employee was
summoned to check the headgates and
detected nothing wrong. The situation
had become extremely perplexing. Some~
thing obviously was wrong, but where?
"Where" soon would be d iscovered by
Iwe personnel approximately three miles
down the canal from the headgates.
TIle felled tree, debris and turbulent wa~
ter erosion speculated, by IWC officials,
likely, had caused the breach during Friday's
early, moming hours. The combination had
punctured a nearly l OO,foot wide opening
in the canal behind Butler U niversity. The
water was rushing over the 100 yards or 50 of
flood plain mat separates the canal where it
parallels the White River. It was a nigh tmare of nigh tmares for the Indianapolis
Water Company.
O ver the next two~and ,a, ha lf days un~
prccedented effort was made to repair the
crippled canal. It would restore service to
app rox imately half of the nea rly 21 0,000
IWe customers or 450 ,000 people affected. Triumph, ultimately, evolved from
the chaos that brought together represen~
tati ves from the IWC, city, county and
state agencies, private contractors, Butler
University, and most importa ntly, the citi ~
zens of Indianapo lis.
Assessing the Damage
"After I was notified of the breach and
arri ved at the scene, it appea rcd as 1 had
always visualized," Joe Broyles stated . "It
was not a panic situation , but one we
were prepared to handle because of disas~
ter planning procedures, We had to de~
termine how bes t to get the job done as
effi ciently, yet producti ve ly, as possible
to preserve th e IWC 's first priority in
providing water to our customers."
22
N AWCWATER
By approximately 8:00AM , Broyles and
several IWC staff members had converged
at the breach site to assess the situati on.
The lWe Distribution Department already was attempting to fill the breach
wi th soil and "riprap" (large stones ).
Pumping and Purification Departmen t
personnel were cutting and removing the
large tree and debris on the north siJe of
the breach.
Wa ter con tinued rushing through the
breach both from the no rth and south
ends of the canal as it flowed toward the
White River. It soon became evident these
initial efforts were fruitless in solving the
problem. A major crisis had developed.
The IWC's Distribution Department bega n building a dam south of the breach to
stop water flow from that direction of the
canal. It would take a monumental effo rt
to restore service to the water system.
Considering the Options
Tim K. Bumgardner, IWC's vice pres i ~
dent of operations, had assumed the re,
sponsibility to make the difficult dec isions on how best to repair the violated
cana l. Bro yles had co nfidence in
Bumgardner and everyone involved from
the water company.
"It was remarkable how our employees
functi oned during this ordeal," noted
Broy les. "Every day I marvel at the dedi cation and way they personally approach
their jobs to provide quality water service
to the citizens of Indianapolis. It was no
surprise th ey accepted this crisis in the
sam e professional manner and developed
ideas o n their ow n, used their knowledge
and ingenuity, and simply took the initi a~
tive to function as a tea m th rough th eir
own indi vidual rcsponsibilities.1J
Broyles recognized his primary role was
to manage the water company and main,
ta in continuous service to its customcrs.
"I realized that long before the canal would
be repaired the city potentially could be
in real trouble/' Broyles said. "I had con~
fidence in Tim to coordinate the canal's
reconstruction , while I left to marshall
our company's forces and communicate
to customers to diminish water con sump~
tio n while the canal was under repair."
Bumgardner consulted with several
people from the IWC's Engineering Depart ment, Mayo r S tephen Goldsmith,
those representing city agencies such as
the Department of Public Works, as well
as Dr. G erald Leonards of Purdue Univer~
sity , a consul ta nt to th e IWC. Dr.
Leonards, ironically, had been in the pro,
cess of completing a study on the effects
of an earthquake hitting the canal at a
site considered more vuln erable t han
where the breach occurred.
Several reconstruction alternatives were
discussed. One idea was proposed by repre~
scntatives of Kenneth Smock Associates,
Inc., who a lo n g wi th Tho mpso n
Contruction Company, were summoned to
the site and retained to assist in the recon,
struction. It called for utilizing steel "H pil,
ing" to be driven at eight~foot intervals and
installing road or street plates between the
pilings to stabilize the bank. This way the
levee could be reinforced with clay soil on
either side of the plating to make it stronger
than prior to the breach.
The bottom of the canal also had become eroded four, to,six feet deep over
approx imately 150 feet because of specu,
lated dragging of debris and turbulent water escaping toward White River. Thom p,
son Construction represen ta tives recom,
mended using clay to rebuild the bcttom
of the canal. S tanley Graves, IWC's principal planning engineer and 21 ~year co m~
pan y employee, suggested building an access road approximately 300 feet down
the east side of the canal fro m street level
on property owned by Butler Unive rsity.
The Decision
Bumgardner considered the various op'
tions to repair the breach, at this point
realizing nothing was 100% positive on
how to approach rhe situation. He de~
cided to use the "H piling" method , along
wi th repairing the canal's eroded bottom
by bringing in truckloads of clay via the
p roposcd access road.
Three major tasks had to be completed
prio r to actu al repair of the canal- l}
close th e headgatcs from Whi te River into
th e canal at Broad Ripple, 2 ) stop the
flow of water north and so uth of the
breach, and 3) construct the access road.
T he Iwe had assessed its problem, selected options to solve it, and began imple~
menting a plan within a few hours of the
breach's discovery.
"Scveral ideas were tossed out to repa ir
the breach, but the 'H -piling' and steel
sheeting appeared to be the best alte rna~
tive/' said Bumgardner, an 18~yea r IWC
stalwart. "Nothing was absolutely 100 per-
.r
:1
r-
•
cent gua ranteed. The ava ilability of ma;
teria ls and rapid installation time had as
much to do with the decision as an y;
thing. We had to do something qu ickly
without knowing exactl y what wou ld
work. I dec ided this was the best opti on
avai lable and went with it. 1I
Bumgardner gave the ICgreen light."
IWC, Smock Associates and Thompson
Construction began mobilizing their forces
to implement repair of the canal. S mock
Associates was ass igned to work on the
"H;pil ing" and levee construction, while
Thompson Construction assumed respon;
sibili ties to secure the headgates, con;
struct the access road, and bring in the
tons of clay requi red to repair the breach.
Thompson Constructi on also was assigned
to bui ld an earthen da m north of the
breach to stop the flow of water. The
IWC's Distribution Department contin~
ued building the dam south of the breach
for the same purpose after initial efforts
failed to fill the breach itself.
Butler U niversity granted permission
to construct the temporary access road
th rough the efforts of Mayor Goldsmith.
Construction crews began work at ap;
prox imately 4:00PM. The headgates were
secured by 6:00PM.
P rophetic Result
it took approximate ly three hours to can;
struct the access road, which was completed
by 7:00PM. Triaxle trucks began hauling in
clay to repair the breach. Truck after truck
lined up from about 7:00PM Friday and
continued for approximately 31 hours until
2:00AM Sunday, June 21.
Did the decision to construct the access
road on the steep eastside bank cause more
problems? Q ui te the contrary. Despite the
delay, the only other alternative would have
been to build a different access road from a
flatter area on the west side of the canal
occupied by Butler University softball fields.
Construction would have been over a flood
plain that pamllels the canal about 100 yards
from the White River. T he road that, ulti;
mately, was constructed provided faster ac;
cessibility to repair the breach. W ithout
this access it, perhaps, would have taken the
IWC longer to repair the canal at a more
ted ious and risky pace. Bumgardner had
made the right decision.
141 was very suspicious about the sugges;
tion at first," Bumgardner admitted. "It was
very steep, but it did offer a much easier
access to get materials in and out, plus we
were not sure of the problems we migh t face
in building the alternative road across the
flood plain."
By late Friday evening, it proved pro;
phetic not to build the other access road
from the softball fields through the flood
plain. By the time the canal had been
dammed and drained, backwater from the
rising White River spilled over the flood
plain and back into the breach. This, likely,
would have wiped out a newly~constmcted
road. Soil had to be moved from the nowdry canal into the breach and onto the flood
plain to push the water back toward the
W hite River. Ironicall y, it was soil which
had already been dumped in the canal via
the newly,constru cted access road
Bumgardner had dec ided upon.
Cooperation by Citizens
Broyles, meanwhile , had called a
midmorning press conference at the iWC's
corporate offices. The media was informed
of the scope of the problem and assisted
quickly in getting the word out concerning
the breach. "Mayor Goldsmith attended on
very brief notice and stressed the severity of
the problem to the media," Broyles noted.
"His prompt attention to our problem was
outstanding. He and the various city, COLUlty,
and state agencies that assisted our efforts
were remarkable in that everyone pulled
together to solve a problem that affected
the citizens of Indianapolis."
Broyles also stressed the importance of
the cooperation by the citizens of India;
napol is. "Hats wen t off to our customers,"
he stated. "Without the incredible coopera~
tion by the people of our city, the water
compan y would have had a difficult time
maintaining adequate water pressure to pro~
vide even essential resources for services
such as fi re protection." By Friday after;
noon, ove rall water usage had dropped al;
most 30 percent (150 million to 110 million
gallons), according to Broyles.
Pressure Begats Pressure
John Sutton, assistant director of the
IWC's Pumping Department and a 21year compan y emp loyee, made his no r~
mal early- morning stop by the Fall Creek
Station around 7:30AM. He was requested
to call the Central Control System at
compan y headquarters across from River~
side Station along the W hite Ri ver.
"Wh en I called they said the canal had
breached," Sutton recalled. "I remember
saying, 'This is not something you wa n t
to joke about, people.' O nce they con~
vinced me it was no joke, the Pumping
Department's ro le was to maintain the
best pressure it could since we realized we
were losi ng millions of gallons of water
o ut of the canal."
Sutton and his colleagues began recl uc;
ing load on the Riverside and W hite River
Pump Stations dependent on canal wa;
ter. At the same time, they worked to
shift load to Fall Creek Station, which is
supplied by a separate water supply from
Fall Creek, and to Eagle Creek Station .
The Riverside reservoir was stabilized by
!0:00PM Friday, according to Sutton .
Several other rese rve sources such as
auxiliary we lls and reservoirs were acti;
vated to mai ntain at least minimal pres;
sure in the water system. "Basically, our
job waS to juggle the water pressure bc~
tween shutting down certain sup ply
sources, while activating those we knew
were ava ilable," Sutton said.
Th roughout the day, into the evening
and over the weekend, Sutton and his
crews worked to maintain water pressure
to provide at least minimal service as much
as possible. Their collective years of ex;
perience and familiarity with the system
were key factors in the lWC's effort to
deal with the crisis at hand. "We acti;
vated one we ll line near Bush Stad ium
(home of the Class AAA Indianapo lis
Ind ians Baseball Club) close to our building that we had shut down in 1988. Once
we flushed out the li ne, it provided us
another source to maintain the system."
"This was the type of ingenuity ourpeopJc
used in working to solve a very complex
situation," Broyles said. "I continue to look
back at how well th ings worked under very
stressful circumstances because no matter
how well we were prepared, it still could not
be dealt with from a reference book."
Sutton fe lt the IWC was never in im;
minent danger of losing the total water
supply. Like Broyles, he credits the c itizens of Indianapolis for their outstanding
water conservation. "What made the dif;
ference was the way our customers can;
served water usage/' Sutton said. "I t was a
blessi ng that the weather was cool, plus
the fact we were heading in to the week,
end and normally reduced usage in down~
town offi ce bui ld ings."
(continued on next jXlge)
WINTER 1992
23
Triumph, continued
Contamination Order
By late-morn ing, Broyles had attended
a meeting of local and state officials at
t he offices of the Indiana Emergency Management Agency. A cooperative decision
was made to encourage those affected by
the breach to conserve water usage and
boil water to avoid any potential of contamination. This was annou nced in the
early-afternoon at the day's second press
conference. "It was in everyone's best interest to take this step as a precaution
against contamination," Broyles said .
Many downto wn bus inesses a nd
high rise apa rtmen t complexes had closed
by mid-afternoon out of concern for fire
safety and to conserve water. Indiana
Governor Evan Bayh closed all downtown state governmen t offices shortl y after noon due to water pressure dropping
30 percent below normal pressure, and to
conserve water consumption.
The city closed traffic on Michigan
Road, a major north-south traffic artery,
for approxi mate ly a mile-and-a-half to facilitate the canal's repair. The city had
mobilized to assist the Indianapolis Wate r Company to deal with one of the biggest challenges in its h istory.
Importance of Relationships
"I am convinced the relationships we
have established with the various agencies in the city and state were a key factor
in the cooperat ive attitude exte nded
throughout this crisis," Broyles emphasized. "Each city and water utility is
unique. The IWC has developed outstanding relationships with our important public sector partners. They had the confidence in our company to get the job done
right, and we, likewise, had a mutual respect for the ir outstanding roles in supporting ou r efforts."
Improvisation
A temporary water line also was installed
at Wh ite River Station to pump water from
Fall C reek into the treatment plant to service both White River and Riverside Pump
S tations. Construction crews began at approximately 2:30PM to install 1,300 lineal
feet of 12-inch pipe. This work was completed by approximately lO:OOPM . W ork
began on a second line around midnight,
and was completed by approx imately
24
NAWCWATER
2:00PM Saturday. After completion of this
line, the W hi te River reservoir was stabilized and started to fill.
Ed Malo ne, assistant director of the
IWC's Distribution Department, a sevenyear company and 15 -year water industry
veteran , indicated it was "business as
usual" for h is crews. uThis was one of the
bigge r jobs because it affected so many
customers, but our guys have had bigger
ch allenges," Malone said. "The maintenance and construction people are used
to doing jobs like this, bu t we also realized it was a huge problem for the water
company as a whole, especially our engineering people at the canal site."
"Distribution's quick work to lay mains
and secure pumps provided a sizable amount
of water supply that truly prevented us from
going 'dry,'" said Tim Bumgardner. "Maintenance personnel working around the clock
to repair water mains and 'troubleshoot' also
played a major role." As their jobs became
completed, Malone and his crews assisted in
other efforts such as cleaning out debris
which had accumulated on the bottom of
the canal.
Pitching In
Most of Friday's activities also involved
several IWC employees handlin g a huge
number of calls from customers inquiring
about the problems stemming from t he
breach . They also notified several businesses, fire departments and schools to
inform them of the status of water service
because of the breach.
Throughout the weekend, literally hundreds of employees fro m the IWC, ou tside agencies and contractors, and volu nteers partic ipated in repairing the breach
to make it truly a "team effort."
Typical of the attitude of people invo lved was that of Steve G rant, a civil
engineering assistant and 21-year IWC
colleague, who worked with construction
crews at the breach throughou t the weekend. G ran t was on vacation early Friday
morning when he received a call about
the breach. H e ad mitted feeling some guilt
like he may ha ve ucrashed the party," and
being a little overzealous in his rush to get
to the site. As he sat in h is car at a stopligh t south of Indi anapo lis next to a
sheriff's deputy prior to getting on the
interstate, the thought of requ esting an
escort crossed his mind.
"I thought about it, bu t he looked like
he was off duty or getting rcady to do so,"
Grant said. "Well , I 'gunned it,' not thinking he would notice. Wrong! I looked in
my rear-vi ew mirror and it took him abou t
five seconds to turn on his flashers and
pull me over. He was totally perplexed as
to why I would speed away right in frOnt
of him. After explaining I had almost
asked him to escort me and why I was in a
rush, he let me go without a ticket."
Just one of the many stories th at will be
told by those in vo lved in the canal breach
when asked, "How did you find out about
the canal?"
Repairing the Breach
The access road was completed by
Thompson Construction by approxi~tely
7:00PM Friday. Smock and Associates had
begun driving the "H-piling" and steel plates
into the bank throughout the day. C rews
worked all night hauling in clay down the
new access road. It was stored in two separate drop-off staging areas in the canal while
the "H-piling" process con tinued throughout the night. Cooperation by the Indianapolis Police Department kept curious spectators at a distance, while the Washington
Township Fire Department provided emer~
gency lighting. A ll day Saturday, June 20,
and into the night, truckload aftet truckload brought the much-needed fill in via
the access road. Progress accelerated as HH_
piling" and steel plates were being driven
into the canal bank. Clay was compacted
into the eroded canal bottom. Backwater
from the White River had been pushed
back.
"We had things pretty much under con~
trol by ea rly Saturd ay morning," said
Stanley G raves. Graves spent much of
the weekend at the site working with
Thompson Construction as it built the
access road and brought soil and clay to
the site. "Starti ng at about 7:00PM Friday, th roughout Saturday, and earl y Sunday morning, things became somewhat
rou ti ne as soil and clay were deposited in
two separate drop-off areas," Graves noted.
"We had a few minor setbacks, but once
the water was drained from the ca nal and
the White Ri ver backwater controlled,
we were able to make very good progress."
A sufficient amount of soil and clay
had been delivered to the site by approximately 2:00AM Sunday, June 21. T he
constant stream of trucks had stopped.
Thompson Constru ction was ab le to as'
sist Smock and Associates with the uH~
pil ing" and sheet plating.
Installation of the "H-piling" and sheet
plating continued throughout early Sunday
morning. By 11:00AM, the tons of soil and
clay finally could be put to use to cover the
steel~ reinforced levee. A special protective
lining was placed part way into the canal
and tied into the steel wall prior to being
covered and packed with soil. An end was
actually in site as the water company and
construction crews worked furiously to re~
store service to customers by early Sunday
evening.
Exactly 300 loads of soil and clay had
been brought in to repair the canal. "I
thought at one point we may not have
enough, then as we neared completion of
the repair, I thought we might have way too
much," Graves admitted. "It proved to be
just the right amount. It was kind of amaz~
ing because we basically had to look at the
breach and take an educated guess. n
By late Sunday afternoon, word. was cir~
culating that the water company would meet
its deadline to complete the project by
around 6:00PM. People who live along the
canal, and other Indianapolis citizens who
had never seen the canal dry, were anxious
to see the water start flowing again.
Soil was compacted over the liner and
the finishing touches were completed by
the construction crews. Much of the com~
pacted clay placed in the erosion channel in
the bottom of the canal wac; smoothed over
to minimize scouring once water was re ~
leased into the canal. The canal bed was
reshaped between the two temporary earthen
darns.
O pening the Headgates
Just before 6:00PM Sunday, the temporary darn which had been constructed south
of the breach was removed and water began
flOWing into the repair area. The north darn
located near Butler University's scenic
Holcomb Gardens was removed around
6:30PM as the headgates were being reactivated in Broad Ripple.
The city ofindianapolis soon would have
its full water supply restored. By Monday,
June 22, the canal was full. 11,e White
River Treatment Plant went back to nor~
ma l rates. By approximately 4:00AM, IWC
resumed nonnal operations. It took most of
Monday before the total system operated
under normal conditions.
"We were very fortunate," said Jo1m
Sutton. "If we had gone into Monday w ith~
out water in the canal, I feel we would have
had more serious problems because the con~
sumption rate in downtown buildings would
have put a strain on the system."
Contamination Order Lifted
IWC officials continued monitoring for
possible contamination, and as a precau~
tion, encouraged people to continue boil ~
ing water. Officials also encouraged cus~
tomers to use as mu ch water as desired to
help flush out the system.
After consulting with state and Marion
County health offici als, the Indianapo lis
Water Company tescinded the boil otdet
fo r most of its customers on Monday, June
22. The boil requ est remained in effect
unt il Wednesday, June 24, as a precau~
tion fo r cllstomers located in two small
areas on the far reaches of the system,
where pressure had fallen below 20 pounds
per square inch.
Future of Canal
The Indianapolis Water Company has
had a goal to redu ce its dependence upon
the canal in its operati ons. "We recognize
th e canal was built ove r 150 years ago and
has served the Indianapo lis Water Com~
pany for well over 100 years," said Joe
Broyles. "Even though the breach was an
improbable occurrence, it reinforced our
priority in studying alternative sources
and commitment to build more facilities."
Serving as an Example
Did the canal breach serve as an ex~
ample for o ther wate r utilities? "Our com~
pany was able to react to this crisis qui ckly
as a private entity and because of our size
and resources, especially in difficult eco~
nomi c times," Broyles continued. "We are
fortunate that our public sector partners
recognize we are good at what we do in
providing quality service. Their assistance
in the breach effort allowed us to do what
we know best, while they did what they
know best.
"Dealing with the canal breach was an
outstanding example of systems, people
and relationships wo rking together,"
Broyles continued. "Because systems were
in place, dedicated people from our com~
pany, as well as from ou tside agencies and
contractors, utilized the relationships we
work so hard to cultivate to do a job in
se rvicing the people of Indianapolis. In
the end, our customers are the heart and
soul to justify our purpose of existence."
Thank You's
IWC officials sent hundreds of "thank
you" letters to company employees, city,
county, and state agencies, Butler Uni ~
ve rsity, Smock Associates, and Thomp~
son Construction. Special "thank you"
advertisements recognizing these var ious
constituencies, and specifically the citi ~
zens of Indianapolis, were published in
the Indianapolis Star, Indianapolis News,
Indianapolis Business Journal, and several
Indianapolis suburban newspapers.
A special tribute picnic was conducted
the afternoon of July 12 on the grounds of
the Indianapolis Water Company to thank
its employees and invited guests from the
various agencies and contractors that helped
in the effort. Everyone received a t~shirt
emblazoned with "I Survived the Chaos on
the Canal," and was treated to an India~
napolis Indians baseball game that evening.
John Sutton and a few of his crew mem~
bers perhaps snickered in recalling the well
line they had reactivated near the stadium
two weekends earlier to help maintain wa~
ter pressure during the canal breach.
Reflections
"This was an incredible story in ou r
city's and company's history," said James
T. Morris, chairman, chief executive offi ~
cer and president of IWC Resources Cor~
po ration , the parent company of the In ~
dianapolis Water Company. "We have
attempted to adequate ly thank everyone
who was invo lved in the repair of the
canal, but only they ca n truly apprecia te
what was done to restore water to the
citizens ofInd ianapolis in such a remark,
ab ly short time period.
"TI1e great people of Indianapo lis were
outstanding in cooperat ing with us while
we repaired the canal," Morris continued.
"Without their cooperation, there is no
qu estion the problems we confronted
could have escalated and become mu ch
more sevete. They sho uld be proud of
their role in this crisis and proud to be a
citizen of Indianapolis. 1 know I am."
The summer storm of 1992. I t will be
remembered by many people for a lo ng,
long time. It also should be remembered
as "Triumph Out of Chaos" for the India~
napolis Water Compan y and the citizens
of Indianapolis. ,
WINTER 1992
25
#
National Association of Water Companies
Water Technology Committee Report
Lead and Copper Survey Results
results summarized by Terry L. G/oriod, Vice President, Production and System Operations, St. Louis County Water Co.
Thanks to participating NAWC Companies, and Paul Keck, of st. Louis County Water Co.,
for his work in compiling data and drafing the report.
The first six-month monitoring period
for the Lead and Copper Rule began for
systems serving over 50,000 people in
January 1992. Systems serving greater than
100,000 people were required to collect
100 first draw samples, and systems between 10,001 and 100,000 were required
to collect 60 first draw samples. Sample
locations were targeted by the EPA to
those locations where the risk of leaching
lead or copper would be highest. These
high-risk sites included single-family residences with lead service lines, lead interior plumbing, or post-1982 copper plumbing with lead solder. Multi-family
residences and public buildings were allowed to be used for sample sites if there
was an insufficient number of single-family residences. The ratio of these different
types of sites to one another determined a
systems sample pool and tier classification. Systems that exceed the action limit
of 15 ppb lead or 1300 ppb copper at the
90th percentile are required to optimize
corrosion control treatment, perform public education, and possibly replace lead
service lines.
NAWC Survey
To get an early assessment of the results of EPA's first draw corrosion monitoring program, NA WC distributed a survey to its members with populations over
50,000 who were required by EPA to collect data for the first six months of 1992.
Information on system size, water quality,
monitoring logistics, and individual first
draw results were collected and entered
into a database. There are approximately
660 systems in the United States which
provide populations over 50,000 with
drinking water. Sixty-three NA WC members fall into this category and surveys
were distributed to these members. Fortythree NA WC utilities, serving approximately eleven million in 18 states completed and re turned the survey. The
26
NAWCWATER
Table 1
Survey Respondents 90th Percentile Levels
fig/I
43 Utilities
Jan.-Jun. 1992
Ranked by Lead
Ranked by Copper
Lead
Copper
Lead
Copper
44
36
20
15
15
15
15
14
14
13
13
150
1800
450
1100
980
360
150
760
730
1100
720
1060
180
150
127
560
440
400
320
180
593
560
320
260
271
170
341
1360
380
100
51
850
540
493
280
271
210
200
200
195
100
70
40
36
5
13
15
12
15
<5
14
14
13
8
9
8
<5
<5
20
9
9
5
15
6
8
9
<5
7
<5
8
<5
<5
<5
<5
9
11
7
44
15
10
10
5
<5
<5
5
<5
1800
1360
1100
1100
1060
980
850
760
730
720
593
560
560
540
493
450
440
400
380
360
341
320
320
280
271
271
260
210
200
200
195
180
180
170
150
150
150
127
100
100
70
51
40
12
11
10
10
9
9
9
9
9
8
8
8
8
7
7
6
5
5
5
5
<5
<5
<5
<5
<5
<5
<5
<5
<5
<5
<5
<5
...
Table 2
NAWC Corrosion Survey Summary
January 1, 1992-June 30, 1992 Results
Participating Systems Statistics
Number of systems participating
Number of ground water sources
Number of surface water sources
Number of mixed ground/surface sources
Number of consecutive systems
Number of service connections
Population served by surveyed systems
Number of states covered
System greater than 15ppb on 90th for lead
System at 15ppb on 90th for lead
System at or greater than 1300 on 90th for copper
43
14
19
7
3
3,033,473
11,273,174
18
3
4
2
Sample Pool Distribution
Number of systems collecting sample pool A
Number of systems collecting sample pool B
Number of systems collecting sample pool C
Number of systems collecting sample pool E
20
7
14
2
Sample Site Type Distribution
Total number first draw samples
Total number samples with post 1982 copper
Total number samples old copper
Total number samples with lead services
Total number samples with other services
Total number samples with lead interior
majority of the systems polled in the survey were utilities located in the northeastern quarter of the United States. Systems using either surface water,
groundwater, or both are represented. The
survey results and discussion present how
this group of companies fared in the first
six-month monitoring period, and give
some insight to the factors that influenced the results.
Sampling Sites
Every system successfully collected all
samples from single-family residences. Targeted sample pools of the survey participants fe ll into one of four ofEPA's sample
pool designations. Twenty systems used
sample pool A, which basically indicates
the system successfully collected 50% of
their samples from sites with lead services
and 50% of their samples from sites with
post-1982 copper-lead solder or lead interior plumbing. Seven systems reported
using sample pool B. Sample pool B includes systems which could not locate
sufficient lead service lines, and therefore
were required to choose more than 50%
of the samples from sites with copper
plumbing and lead solder installed after
1982, or sites with lead interior plumbing. Fourteen systems reported no lead
service lines and the use of sample pool
C. Sample pool C consists entirely of sites
with either copper plumbing and lead solder, or sites with lead interior plumbing.
Two systems reported that their sample
pool could best be described as sample
pool E. Sample pool E allowed collection
4021
2573
6
1328
101
13
100%
64%
0%
33%
3%
0%
of copper plumbing sites with lead solder
before or after 1982.
Survey Results
Forty of forty-three systems reported
lead results less than 15 ppb at the 90th
percentile. For copper, 41 of 43 of systems
were below 1300 ppb at the 90th percentile. Only one system exceeded both the
lead and copper action levels. Of the fortythree utilities responding, ten systems
reported 90th percentile levels between
15 ppb and 10 ppb, fourteen systems
reported 90th percentile lead levels between 10 ppb and 6 ppb. Sixteen systems
reported 90th percentile levels which fell
at or below 5 ppb. The 90th percentile
results are presented in Table 1 for the
(continued on next page)
WINTER 1992
27
Survey Results, continued
forty-three respondents. Tables 2 through
5 list the survey results by functional category.
A total of 4,021 first draw results for
lead and copper were entered into a database and examined. As a group, 844 (21 %)
samples had lead levels above the 5 ppb
quantitation level. T wo-hundred thirtyfour (6%) of the samples had lead levels
over 15 ppb, the action level for lead.
Quantifiable levels over 30 ppb of copper
were found in 3,050 or 76% of the samples.
The copper action level of 1300 ppb was
exceeded in only 51 or 1 % of these
samples.
Ninety-seven percent of all samples
were collected either from sites using copper plumbing and lead solder (post-1982)
or sites with lead service lines. The copper and lead solder sites predominated
with 2,573 or 64% of all samples. Lead
service line sites contributed 1,328 or 33%
of all samples. These two sample groups
were analyzed to determine if one group
inherently produced higher lead or copper results.
Discussion of Results
Lead service line results from all fortythree systems show lead levels greater than
5 ppb in 28% of the samples. The 15 ppb
level for lead was exceeded 6% of the
time. Copper was found 65% of the time
above the 30 ppb quantitation level, but
never above the copper action level in
these lead service line site samples.
All post-1982 copper and lead solder
sites showed lead levels to exceed the 5
ppb quantitation level 18% of the time,
and the lead level to exceed the 15 ppb
action level 6% of the time. Copper levels above 30 ppb were found in 83% of
the samples, and copper levels above the
1300 ppb level were found in only 2% of
the samples.
The 5 ppb practical quantitation level
for lead was exceeded 18% of the time in
samples collected from post-1982 copper
Table 3
Distribution of Lead and Copper Levels
Total Samples Exceeding Action Level
Total number samples greater than 15 ppb lead
Total number samples greater than 1300 ppb copper
4021 Total Sites
234
51
6%
1%
844
3050
21 %
76%
Total Samples Over Quantitation Level
Total number samples greater than 5 ppb lead
Total number samples greater than 30 ppb copper
Lead Services Sites Exceeding Action Level
I
I
Total number samples greater than 15 ppb lead
Total number samples greater than 1300 ppb copper
1328 Total Pb Sites
78
1
6%
0%
367
863
28%
65%
Lead Services Sites Over Quantitation Level
Total number samples greater than 5 ppb lead
Total number samples greater than 30 ppb copper
Post 1982 Copper Sites Exceeding Action Level
Total number samples greater than 15 ppb lead
Total number samples greater than 1300 ppb copper
2573 Total eu Sites
156
50
6%
2%
476
2131
18%
83%
Post 1982 Copper Sites Over Quantitation Level
Total number samples greater than 5 ppb lead
Total number samples greater than 30 ppb copper
28
NAWCWATER
services and 28% of the time in samples
collected from lead services. The 15 ppb
action level was exceeded 6% of the time
for both the post-1982 copper services
and for the lead services. Similarly, results from the A sample pool, (50% lead
service and 50% copper service) show
lead levels over the 15 ppb again at the
same rate, 6% of the time. This indicates
that the service line material may be less
important than water quality characteristics
in determining if first draw lead results exceed the action level.
In the three systems that exceeded the 15
ppb lead action level, the highest pH was
7.6, the highest conductivity was 188
micromho's, the highest alkalinity was 32
mg/L as CaC03, and the highest calcium
was 36 mg/L. In addition, phosphate to inhibit corrosion was not used or used only in
low levels. Systems which are at 15 ppb or
approach 15 ppb at the 90th percentile,
tend to have lower phosphate levels (less
than .10 mg/L) than systems who are much
lower than the 15 ppb level. This may indicate the success of systems who use phosphate as a corrosion inhibitor.
Of the forty-three systems surveyed, 28
reported the use of a corrosion control
chemical. Twenty-two systems fed phosphate and six systems reported using lime
addition. The average cost of phosphate
was $9.31/MG, excluding two systems
which fed hexametaphosphate at a much
higher cost (approximately $75/MG). The
average dose of phosphate was 2.3 mg/L.
The reported data was insufficient to determine the cost for lime addition.
Sample Collection and Analysis
Systems were given the option by the
EPA to have customers collect samples or
have their own personnel collect samples.
Systems had no recourse to challenge results if sample collection was believed to be
in error. Customer collected samples were
used in twenty-seven of the thirty-six systems who reported their sample collection
mode. Nine systems utilized utility personnel to obtain the first draw samples.
Twenty-two systems performed their
own laboratory analyses; twenty-one systems reported using outside laboratories.
Of the thirty-two systems reporting costs,
the estimated average cost per sample
analysis was $23. No difference in cost
was noted between in-house and outs ide
laboratory analysis. ,
+'
NAWC Corrosion Survey Participants
Table 5
Table 4
Average
Cost/Sample
Sample Analysis
Number
Systems Which Have 90th Percentile Lead Levels Over 15 ppb
Sample Pool Make-Up
Pool A
PoolC
2
1
$23.10
$22.50
Systems Analyzing Own Samples
22
Systems Using Contract Laboratories 20
Average
Total Cost
Sample Pickup
Samples in This Group Which Exceed 15 ppb
Lead Service
Copper Service
18
49
Systems Picking Up Own Samples
Systems Having Customers
Pickup Samples
9
$20,962
27
$8,528
High Bounds Of Water Quality Parameters For The Group
Calcium
Conductivity
Alkalinity
pH
Phosphate
37 mg/L
188
32 mg/L
7.6
0.04 mg/L
Average Average
Cost/Mg Dose
Corrosion Chemicals Fed
Phosphate
Lime
22
6
9.31 *
2.3 mg/L
NO
NO
* Excludes Hexametaphosphate
WINTER 1992
29
Potential Consequences of Abandoning
Cost,Based Declining,Block Rates
by Thomas R. Stack
Illinois Commerce Commission'
presented at the
Eighth NARUC Biennial Regulatory Information Conference
September 7992
1. Introduction
This paper examines a declining-block
rate structure that was adopted for a large
investor-owned water utility regulated by
the Illinois Commerce Commission. The
current rates for that utility (developed
after examining an embedded cost-of-service study utilizing the Base-Extra Capacity Method set forth in the American
Water Works Association (AWWA)
Manual M1 2) are compared with rates
resulting from application of both a singleblock rate structure and an inverted-block
rate structure. Bills for water service for
various customer classes are then compared using the cost-based declining-block
rates currently in effect and rates that
would result if the rate blocks were eliminated or inverted. Finally, the potential
reactions of large customers are considered if rates were to be modified in such a
manner.
II. Changes in Rate Design in the
Water Industry
When the water supply industry first
began in this country, customers were
charged for water service based not directly
on water usage but on various criteria
serving as proxies for water usage including the number of people in the building,
the width of the house, the size of the
yard and the number of water using
devices. Viewed today, many of those
old rate schedules appear almost comical. However, the lack of inexpensive,
accurate meters required such rates in an
attempt to recover costs fairly from
customers.
With the introduction of meters that
could accurately measure the volume of
water usage in the late 1800s,3 charges
began to be based directly on water usage.
A s meters became more economical, the
30
NAWCWATER
vast majority of systems installed meters
and changed to usage-based rates. In 1917,
the noted water authority Allen Hazen
wrote, "In the last sixteen years the increase in the use of meters has been rapid
and the number of completely metered
systems at the present time is much
greater."4
As rate design became more sophisticated, declining-block rates together with
a minimum bill or service charge were
utilized in recovering the cost to provide
water utility service. Over time, the declining-block rate structure became common and "for many years, a single schedule of declining-block rates applicable to
all customers classes was the predominant water rate form in the United
States."s
In 1954, the American Water Works
Association (AWW A) published the report "Determination of Water Rate
Schedules" which subsequently was issued
as Manual M1.6 Beginning with that report and subsequent revisions to the
Manual, the recommended size of the rate
blocks became more defined. The current
version of Manual Ml (Fourth Edition)
uses a rate structure consisting of three
rate blocks as an example. 7
Recently, due primarily to conservation considerations,Sthere has been some
movement toward reducing the number
of blocks in declining-block rate structures or even eliminating the decliningblock rate structure entirely and moving
to a single-block rate structure.9 In some
instances, inverted-block rates have been
advocated and adopted. A survey of large
water systems found that 51 % of those
systems utilized declining-block rates, 32%
had a uniform (single-block) rate, and
17% had inverted-block rates. lO Of water
systems in the midwest, 22 out of 28 had
declining-block rates while in the west
only 2 out of 20 had declining block
rates. l1
III. Analysis of an Illinois Utility
A. Description of the Example
Utility
The utility'2 used in the example provides water service to some 65,0 00
customers-including 57,200 residential,
7,600 commercial, 280 industrial, and 38
sale-for-resale customers. Public and private fire protection services are also provided.
This is one of the older water systems
in Illinois; the initial water system was
constructed in 1885. The source of raw
water supply is the Mississippi River. Extensive treatment of the water is provided
before it is pumped into the distribution
system. The service area consists of some
500 square miles and includes 927 miles
of transmission and distribution mains and
numerous storage tanks and booster stations. Much of the service area is in the
valley lowlands of the Mississippi R iver
and overlays extensive sand and gravel
water bearing formations. 13 This area contains numerous industrial firms including
divisions of a number of the nation's large
corporations. Actual revenues for the water company for 1990 were approximately
$23,300,000, based on sales of 18.54 1 billion gallons of water.
B. Current Water Rates for the
Example Utility
The rates used as an example for this
paper are on file with the Illinois Commerce Commission as a result of a formal
rate case. 14 During the course of that case
the Utility presented its testimony and
exhibits. Witnesses for the Utility were
+
cross-examined by parties to the case
which included the Commission Staff, a
number of municipalities served by the
utility, and a group of industrial interveners. Witnesses for Staff and the industrial
water users presented testimony and were
cross-examined by the utility and other
interested parties. Rebuttal testimony was
filed by the utility and subsequently by
the Staff. At the conclusion of the
evidentiary portion of the case, a stipulation was reached whereby all active part ies accepted Staffs position in its Rebuttal testimony with one minor modification
with which Staff acquiesced.
The utility presented a full cost-ofservice study utilizing the Base-Extra
Capacity Method contained in A WWA
Manual Ml. Staff also presented a full
cost-of-service study which utilized the
Base-Extra Capacity Method. The rates
adopted by the Commission's Order were
stipulated to by all of the parties and were
based on Staffs cost of service study. (It
should be noted that the Utility's and
Staffs studies resulted in very similar
rates.)
The rates filed pursuant to the
Commission's Order, usages by class, and
the number of service connections by
meter size are set forth in Table l.IS
As can be seen, the rates for general
service consist of a service charge based
on meter size and a charge for usage
consisting of a declining-block rate structure. In addition, revenue results from
public and private fire protection and miscellaneous services.
The quantity of water allowed in each
rate block was determined in a previous
rate case and was not changed as a result
of this case. The quantity of water contained in the first block (usage of the first
3,000 cubic feet or 22,500 gallons per
month) was selected so that virtually all
the residential usage (97%) would be
billed in that rate block. The second block
(57,000 cu ft or 427,500 gal) was chosen
so that it includes substantial commercial
usage along with small industrial usage.
(continued on next page)
Table 1
Revenues with Cost..Based Rates
Base..Extra Capacity Method
AWWA Manual Ml
Item
Service Charges,
Monthly
Rates
Meter Size
$6.50
34"
12.00
20.00
1"
45.00
1 ~"
70.00
2"
135.00
3"
225.00
4"
445.00
6"
710.00
8"
Bills
685,971
264
414
48
24
0
0
0
0
Residential
Revenue
$4,458,812
3,168
8,280
2,160
1,680
0
0
0
0
TOTAL
Usage
Charges
Bills
75,921
1,469
5,808
861
3,180
59
108
0
0
Commercial
Revenue
493,487
17,628
116,160
38,745
222,600
7,965
24,300
0
0
$4,474,100
Rate
Per 100
CuFt.
First 3,000
Cu Ft/Mo
Next 57,000
Cu Ft/Mo
Next 1,240,000
Cu Ft/Mo
Over 1,300,000
Cu Ft/Mo
Bills
747
72
396
61
1,188
168
672
72
36
Industrial
Revenue
4,856
864
7,920
2,745
83,160
22,680
151,200
32,040
25,560
Public Authority
Revenue
Bills
1,068
6,942
132
1,584
981
19,620
8,640
192
110,880
1,584
24
3,240
36
8,100
0
0
0
0
Sales for Resale
Bills
Revenue
0
0
0
0
12
240
0
0
96
6,720
36
4,860
204
45,900
37,380
84
24
17,040
$331,025
$159,006
$112,14
$920,885
Usage
Revenue
Usage
Revenue
Usage
Revenue
Usage
Revenue
Usage
Revenue
1.450
4,709,034
$6,828,099
953,011
$1,381,866
51,701
$74,966
72,830
$105,604
4,637
$6,724
0.989
116,311
115,032
890,973
881,172
442,179
437,315
334,418
330,739
88,864
87,886
0.851
8,306
7,068
386,125
328,592
2,093,569
1,781,627
203,476
173,158
1,606,668
1,367,274
0.611
0
0
0
0
3,723,388
2,274,990
0
0
2,856,919
1,745,578
Total Revenue by Class
Total
$5,997,155
$6,950,199
$2,591,631
$4,568,899
$609,501
$3,207,462
$17,927,692
$11,424,299
$3,512,515
$4,899,923
$768,507
$3,319,602
$23,924,846
Other Revenue
Private Fire Protection
Public Fire Protection
Other Operating Revenue
$84,888
$1,237,598
$31,936
$1,354,422
Total Revenue
$25,279,628
WINTER . 1992
•
31
,
Potential Consequences, continued
The third block (1,240,000 cu ft or
9,300,000 gal) includes substantial usage
from smaller industrial customers and some
very large commercial customers. The fourth
block (usage in excess of 1,300,000 cu ft or
9,750,000 gal) was selected so that it includes usage by very large industrial and
resale customers.
III
III
C. Resulting Single-Block Rate
and an Inverted-Block Rate
Table 2 sets forth the declining block
rates adopted by the Commission's Order in
91-0100. Also set forth on Table 2 is the
resulting single block usage rate, assuming
the same revenue requirement and maintaining all other rates at the same level as
found appropriate in the Commission's Rate
Order. Finally, an example of an invertedblock rate is included. The inverted-block
rate assumes a first block of 3,000 cubic feet
which is probably higher than would normally be used but was chosen as an example
for this paper since the usage information is
available. Information needed to calculate
the usage units for a rate block of 700 cubic
feet per month which would be more typi-
cal of a lifeline usage that might be chosen
for the first block of an inverted-block rate
structure is no longer available to the author.
D. Comparisons of Bills With
Various Rates
To understand the effect of eliminating
rate blocks or inverting the rates, it is necessary to compare water bills at various levels
of usage for each class of customer. Table 3
compares the bills (excluding add-on-taxes
and public fire protection charges 16 ) for residential customers using the currently effective rates, the single block rate, and an inverted-block rate. For this utility, the average
residential usage is 700 cubic feet (5,250
gallons). Table 4 contains a comparison of
bills for commercial customers, while bills
for industrial customers are compared in
Table 5.
E.
Discussion of Bill Impacts
with the Various Rates
1. Residential Customers
If a single-block rate were to be utilized
for this utility, the resulting usage rate
would be $0.9668 or $0.4832 (33.3%)
less than the current $1.45 rate in the
first block of the cost-based rate design.
Although the elasticity of water use may
not be high for relatively small changes
in water bills, especially for water use inside the home, decreasing the usage rate
by one-third and the bills by 20% or more
sends a rather clear price signal to the
residential class that additional usage is
appropriate. A usage rate of $.97/100 cu.
ft. could encourage customers to water
lawns when they might not have watered
at a rate of $1.45 per 100 cu. ft. While a
particular utility may have sufficient supply and treatment capacity to support a
reasonable amount oflawn watering, such
watering, unrestricted by price considerations, can cause low pressure conditions
during peak periods due to the inability of
the distribution system to deliver sufficient quantities to meet watering demands
beyond what is typically contemplated.
Inverting the rate for the entire residential class, as in the example, would aggravate the price signal even further. Even if
the rate were inverted for all usage beyond
600 or 700 cubic feet, there might be a
signal to residential customers to use water
wisely, but the rate would still be less than
Table 2
Comparison of Usage Revenue Under Various Rate Structures
Keeping Service Charge and All Other Rates Constant
RATES
Residential
Usage
Revenue
Commercial
Usage
Revenue
Usage
Industrial
Revenue
51,701
442,179
2,093,569
3,723,388
$74,966
437,315
1,781,627
2,274,990
Public Authority
Usage
Revenue
Sales for Resale
Usage Revenue
Total
COST-BASED RATES-From Table 1
First Block
Second Block
Third Block
Fourth Block
$1.450
0.989
0.851
0.611
4,709,034
116,311
8,306
0
$6,828,099
115,032
7,068
0
953,011
890,973
386,125
0
$6,950,199
$1,381,866
881,172
328,592
0
$2,591,631
72,830
334,418
203,476
0
$4,568,899
$105,604
330,739
173,158
0
4,637
88,864
1,606,668
2,856,919
$609,501
$6,724
87,886
1,367,274
1,745,578
$3,207,462
$17,927,692
SINGLE-BLOCK RATE
First Block
Second Block
Third Block
Fourth Block
$0.9668
0.9668
0.9668
0.9668
4,709,034
116,311
8,306
0
$4,552,694
112,449
8,030
0
953,011
890,973
386,125
0
$921,371
861,393
373,306
0
51,701
442,179
2,093,569
3,723,388
$49,985
427,499
2,024,063
3,599,772
72,830
334,418
203,476
0
$70,412
323,315
196,721
0
4,637
88,864
1,606,668
2,856,919
$4,483
85,914
1,553,327
2,762,069
$4,673,174
$2,156,069
$6,101,317
$590,448
$4,405,793
$17,926,801
Difference from Cost-Based Rates
(2,277,025)
(435,561)
1,532,418
(19,053)
1,198,331
($891)
INVERTED-BLOCK RATES
First Block
$0.788
4,709,034
Second Block
$1.048
116,311
Third Block
$1.048
8,306
Foruth Block
$1.048
0
$3,710,719
121,894
8,705
0
Difference from Cost-Based Rates
32
NAWCWATER
953,011
890,973
386,125
0
$750,973
933,740
404,659
0
51,701
442,179
2,093,569
3,723,388
$40,740
463,404
2,194,060
3,902,1ll
72,830
334,418
203,476
0
$57,390
350,470
213,243
0
4,637
88,864
1,606,668
2,856,919
$3,654
93,129
1,683,788
2,994,051
$3,841,317
$2,089,371
$6,600,315
$621,103
$4,774,623
(3,108,882)
(502,259)
2,031,416
11,602
1,567,160
-
$17,926,72 9
($963)
the rate currently in effect. Thus, there would
be at least an initial price signal to use more
water.
Table 3
Monthly Bill Comparisons
Residential Customers
Single-Block
Usage
Level
Cost-Based
(CCF)
Rates
300
500
Inverted-Block
Bill
$
%
Diff
Diff
Bill
$
%
Diff
Diff
-18.3%
$10.85
$9.40
($1.45)
$13.75
($2.42)
-13.4%
-17.6%
$10.44
($1.99)
($3.31)
($3.38)
-20.3%
$12.02
($4.63)
-27.8%
-23.0%
$14.38
($6.62)
-3 1.5%
-27.2%
-29.0%
$22.26
($13.24)
$30.14
($19.86)
-37.3%
-39. 7%
700
1,000
$16.65
$11.33
$13.27
$21.00
$16.17
2,000
$35.50
$25.84
($4.83)
($9.66)
3,000
$50.00
$35.50
($14.50)
$8.86
-24.1%
Assumption:
'1," meter for all usage levels
Table 4
Monthly Bill Comparisons
Commercial Customers
Inverted-Block
Single-Block
Usage
$
$
%
Diff
%
Diff
Diff
Diff
1,000
$21.00
$16.17
($4.83)
-23.0%
$14.38
($6.62)
-31.5%
3,000
5,000
$50.00
$35.50
$54.84
($14.50)
-29.0%
$30.14
($19.86)
$69.78
($14.94)
-21.4%
$51.10
($18.68 )
-39.7%
-26.8%
$117.00
$536.20
($15.73)
-1 1.9%
Level
(CCF)
Cost-Based
Bill
Rates
10,000
$132.73
$116.68
($16.05)
-12.1%
50,000
$528.33
$503.40
($24.93)
100,000
$967.63
$986.80
$19.17
-4.7%
2.0%
Bill
$1,060.20
$7.87
1.5%
$92.57
9.6%
Assumption:
'I/meter for usage to 5,000 ccf.
I" meter for usages in excess of 5 ,000 ccf.
Table 5
Monthly Bill Comparisons
Industrial Customers
Usage
Cost-Based
(CCF)
Rates
Bill
$1,017.63
$4,421.63
$1,036.80
$4,904.00
100,000
500,000
Inverted-Block
Single-Block
Level
$
%
$
%
Diff
Diff
Bill
DiH
DiH
$19.17
1.9%
$1,110.20
$482.37
10.9%
$5,302.20
$92.57
$880.57
19.9%
9.1%
1,000,000
$8,831.63
$9,893.00
$1,061.37
12.0%
$10,697.20
$1,865.57
21.1%
3,000,000
$21,991.63
$29,449.00
33.9%
45.0%
$34,476.63
$49,050.00
42.3 %
$31,877.20
$53,102.20
$9,885.57
5,000,000
$7,457.37
$14,573.37
$18,625.57
54.0%
10,000,000
$65,736.63
$98,100.00
$32,363.37
49.2%
$106,212.20
$40,475.57
61.6%
Assumption:
2" meter for 100,000 and 500,000 ccf
4" meter for 1,000,000 ccf
6" meter for 3,000,000 ccf
8" meter for 5,000,000 ccf
(2) 8" meter for 10,000,000 ccf
2. Commercial Customers
Small commercial customers will receive
the same price signal that residential customers receive since they purchase in the
same block. The effect on usage for most
commercial customers would not be expected to be as great as on residential customers since many small commercial customers simply don't have the ability to use
considerable amounts of outside water. Also,
commercial customers view water as a business expense, and, in an attempt to maximize profits, can be expected to restrict usage.
Larger commercial customers presumably
would be fairly neutral since their bills would
change very little under either a single-block
rate or the inverted-block rate used in the
example.
3. Industrial Customers
Recovery of the revenue requirement of a
utility can be thought of as a teeter-totter in
a horizontal position with a large number of
small use customers on one end and a small
number of large use customers on the other
end. If one end of the teeter totter is pushed
downward, the other end must rise. If declining-block rates are eliminated, rates to
residential and small commercial customers
have been pushed downward. The rates to
large users rates must then go up to maintain the same overall revenue from the usage charges. This is exactly what happens in
our example. Industrial customers will experience a substantial rate increase if a singleblock or inverted-block rate structure is
adopted.
In moving from a cost-based declining
rate structure to a single block rate structure, the resulting increase to industrial customers would be in the range of 33 to 49%
depending on usage. This sends a very clear
signal to reduce usage. This is especially true
for an industrial firm that is competing with
firms located in different parts of the country and throughout the world. For a firm
using 10,000,000 cubic feet (75,000,000 gallons) of water a month, the elimination of
declining-block rates would cost that customer an additional $32,000 per month for
its water use. Presumably, that customer has
already installed water reuse equipment in
(continued on next page)
WINTER 1992
33
Potential Consequences, continued
an effort to reduce costs to compete with
other firms in other locations. However, an
increase of this magnitude will send a strong
price signal to take further action.
The situation is aggravated if invertedblock rates are employed. While the exact
impact will depend on how low a rate is
established in the initial block and the
quantity of water included in block, the
large user always will be effected more by
inverted-block rates than by a single-block
rate.
F.
Expected Response to SingleBlock or Inverted-Block Rates
1. Residential Customers
With a usage rate reduction of one-third,
if a single block rate were to be adopted,
residential customers can be expected to be
less concerned about the cost implications
of watering their lawns. Accordingly, it is
reasonable to expect that residential customers will have less incentive to restrict
outside water use and therefore outside use
will continue at the same or higher level
than experienced with cost based rates.
2. Commercial Customers
Small commercial customers would see
the same price incentive as residential customers so they can be expected to remain at
the same usage level with perhaps some
increased usage. However, the increase can
be expanded to be less than that for residential customers since the price decrease will
allow increased profits and therefore commercial customers can be expected to take
advantage of the decreased price.
3. Industrial Customers
What type of response can be expected
from industrial customers? For a very large
customer a rather severe response can be
expected. Assuming that a large firm has
already taken actions to reduce water usage
through recycling and-similar activities, that
firm will look at additional ways to reduce
usage which were not economical with cost
based rates.
Firms can also be expected to consider
developing their own supply. Most industries are reluctant to commit their scarce
capital resources to water production equipment. However, several industries have
clearly indicated to Commission Staff that
34
NAWCWATER
they will install their own water systems if
the incentive is sufficiently high.
For this utility as well as for a number of
other utilities in Illinois, large industries have
an alternative to receiving water service
from the utility. They can drill wells to
obtain water. In some instances, they can
obtain water from the same river from which
the utility takes its supply. Also, many utilities do not require as high a level of water
quality as must be provided by a public
water supply. These industries may be using
the water primarily for cooling purposes and
potable quality is not required. Industries
also have the option of purchasing their
domestic water from the utility while obtaining process water from their own supply.
In areas with plentiful groundwater, the
threat by an industrial customer to develop
its own supply must be seriously considered.
One Illinois water utility was faced with
just such a threat from a large industrial
firm. That firm was a steel company facing
considerable foreign competition. Although
the Commission is always concerned by the
threat of the loss of a customer, when a firm
purchases 25% of the water sold by a utility
any threat to discontinue service gets considerable Staff attention. In this particular
case, representatives of the steel company
came to a meeting armed with construction
plans and cost estimates. The utility was
convinced that they were serious. After examining the plans and cost estimates, the
staff was also convinced that the threat was
real and the steel company should be taken
seriously.
A special contract rate was developed to
retain that firm as a customer of the utility
because of the substantial contribution to
fixed cost that would be made even at the
reduced rates. With that contribution to
fixed costs, the other customers were in a
much better position than if that firm ceased
being a customer altogether. The utility filed
a special contract rate for that one customer
and staff recommended that it be approved.
The Commission allowed the rate to become effective- thus keeping that firm as a
customer of the utility.
A similar threat was made by a major
industrial concern of another water utility.
That firm used 13% of the total water sold
by the utility. Again the firm was able to
convince the utility that it was serious about
developing its own water supply and would
do so if some rate reduction was not made.
The utility and the firm reached an agreed
rate and after reviewing the specifics of the
calculations, staff supported the rate. The
rate order entered by the Commission approved the lower rate in an effort to retain
the firm as a customer. Those rates were
approved since the other customers would
benefit from the retention of the firm, even
though that firm would pay rates somewhat
lower than those at full cost of service.
Depending on how much water is used
and how much the cost of water impacts the
bottom line of the particular business, industrial firms sometimes have another option. If the firm is a part of a national corporation, the national corporation can
sometimes shift production to another less
costly site. The corporation can even cease
production at a particular site. In extreme
cases, a firm can simply be driven out of
business by the high cost of water.
G. Potential Undesired Results of
the Elimination of Cost-Based
Rates
The reason given for the elimination of a
declining-block rate structure is that it promotes usage and therefore is anti-conservation. However, in the short run, the elimination of declining-block rates in instances
where major industrial customers are served
will initially reduce the rates to the residential customers, the very group that is most
likely to use vast quantities of water for
discretionary outside uses. In the long run,
elimination of declining-block rates may severely reduce overall sales of a utility that
has adequate supply and treatment capacity
by encouraging the industrial users to develop their own supply or to transfer production to other plants.
The utility's sales may be reduced as contemplated by the new rate design. However,
overall water usage for the area could remain at the same level due to industrial
firms drilling their own wells, thus defeating
the intended goal of the rate design. In
addition, there are potentially dire consequences for the utility and the remaining
customers since costs will be reduced relatively little (typically in the range of 1O¢ to
25¢ /1000 gal due to reduced electrical and
chemical use) while revenues will be substantially reduced (approximately 70¢ /1000
gal. for the example utility). This leaves the
residential, commercial, and smaller industrial customers to bear a much higher percentage of the fixed costs that were formerly
spread over a much larger base.
----------------- --------------------------------------~~
IV. Conclusion
For the utility used as an example in this
paper, replacing the declining-block rate
structure with a single-block or invertedblock rate structure is not in anyone's best
interest. It is not in the best interest of the
industrial customers who will incur additional costs and consume precious capital to
develop their own supply. It is not in the
best interest of the remaining residential
and commercial customers since they will
have to bear a much larger percentage of the
fixed costs and may be without a job if the
industrial customer shifts production or
closes the plant.
Elimination of the declining-block rate
structure is most definitely not in the best
interest of the utility who will see sales shrink
and who must absorb reduced earnings until
rate case proceedings can be concluded. Even
then, complete recovery is not assured since
intervenors and perhaps Staff could argue
that plant is now under-utilized and therefore a portion of the utility's investment in
plant should be deducted from rate base. If
such an argument were to be successful,
there is a potential for a financially ailing
utility with bankruptcy as a real possibility.
The old saying, "If it ain't busted don't fix
it," certainly seems to fit in this instance.
The elimination of declining-block rates
may be appropriate in some instances, but
for the example utility and in much of the
water-rich midwest, "fixing" the currently
used cost-based declining-block rates will
lead the utility and all of its customers
down a very uncertain path.
1The views and opinions of the author do not
necessarily state or reflect the views, opinions
or policies of the Illinois Commerce Commission, individual Commissioners or other members of the Staff of the Commission.
'American Water Works Association, Water
Rates-Manual M1 (Denver, Co : American Water Works Association , Fourth Edition , 1991).
3American Water Works Association,. Water
Meters-Selection, Installation, Testing, and Maintenance- Manual M6 (Denver, Co: American
Water Works Association, Second Edition,
1972), Chapter 1.
4Allen Hazen, Meter Rates For Water Works (New
York, NY: John Wiley & Sons, 1918), 10.
sAmerican Water Works Association, Alternative
Rates-Manual M35 (Denver, CO: American
Water Works Association, First Addition, 1992),
iv.
6American Water Works Association, Water RatesManual M1 (Denver, Co: American Water Works
Association, Fourth Edition, 1991), 1.
%id,41.
BAmerican Water Works Association, Alternative
Rates-Manual M35 (Denver, Co: American Water Works Association, First Edition, 1992),3.
9Massachusetts & California
IOGeorge A. Raftellis, The Arthur Young Guide To
Water And Wastewater Financing And Pricing
(Chelsea, MI: Lewis Publishers, Inc., 1989), 168.
"ibid, 167
"Illinois-American Water Company, Interurban Division, a wholly owned subsidiary of the American
Water Works Company,Inc.
13G.E. Reitz, Illinois State Water Survey, Groundwater Levels and Pumpage In The East St. Louis
Area, Illinois 1962-1966 (Urbana, II: State of Illinois, Department of Regulation and Education),
1.
14Illinois-American Water Company, Proposed General Increase In Water Rates, Docket 90-0100,
order entered by the Illinois Commerce Commission on November 20, 1990.
IsICC Staff Exhibit No. OPP 1.02 sponsored by the
author in Illinois Commerce Commission, Docket
No 90-0100.
16In Illinois, municipal taxes, franchise fees, and the
Public Utility Fund tax are addea to the customer's
bills as separate line items. Also, by law municipalities have the ability to choose the amount they are
willing to pay for public fire protection. Any public
fire protection costs not paid by a municipality are
added to the bills of customers within that particular
municipality. Since the taxes and fire protection
charges vary by municipality they are not included in
the bill comparison. ~
Water Treatment: A Joint Effort
reprinted from California Water Association News
C alifornia's first jointly-funded project
between the Department of Health Services and a private water utility to improve an area's water quality was officially recognized in ceremonies held in
Chino, CA.
Representatives of California Water
Service Company (CWS) and the Califo rnia Environmental Protection
Agency's Department of Toxic Substance Control joined together to commemorate the completion of a cooperative effort to install a carbon adsorption
system designed to treat water from a
company-owned well.
T he cost of constructing the facility,
approximately $162,000, was shared
equally between the company and the
state. Under the agreement, Cal Water
will assume all operational and mainte-
nance costs for the life of the system.
Participating in the ceremonies was Val
Siebal, regional administrator for the
state's EPA Department of Toxic Substance Control.
Siebal said that construction of the
new treatment facility will not only provide ' the community with a source of
clean drinking water but also a cost effective means for treating contaminated
groundwater in the area.
The carbon adsorption system was
constructed at the Cal Water well to
treat ground water which had been
contaminated with perchloroethylene
(PCE), a common dry cleaning solvent
and a suspected human carcinogen.
The well had been shut down since
1986 because samples had revealed levels of PCE above state drinking water
standards of five parts per billion.
Ray Taylor, Cal Water's vice president of water quality and environmental affairs, told state and local dignitaries who attended the on-site ceremonies
that the Company appreciated the opportunity to work with the state's Department of Toxic Substance Control
in helping to alleviate underground contamination problems.
As a related project, also funded by
the state as part of the agreement, Cal
Water has completed the installation of
a residential water line to provide 14
residents, who have had contaminated
private wells, with safe drinking water.
Some of the residents have agreed to
abandon their wells in an effort to stop
the spread of contamination.
WINTER 1992
35
Adding to Your Communications Reach
by Larry L. Bingaman
Vice President, Marketing & Communications, Aquarion Company
Advertising has long been regarded as
a communications technique used by com ~
panics to generate sales, build images, in~
fluence buying decisions or educate its
publics about products and issues. For a
water utility that wants to communicate
more aggressively with its customers and
others, advertising also can be an effec~
tive tool, when used as part of an overall
strategy and a sustained communications
campaign.
Background
In the spring of 1991, Bridgeport H ydraulic Compan y's parent changed its
name fro m The Hydraulic Company to
Aquarion Company. The new name and
a new logo were adopted to better reflect
the water,qu ality orientation of our prin,
cipa\ businesses- public water supply and
environmental testing laboratories. A key
component of this process was planning a
communications program to announce the
name change and position Aquarion as a
water~qua lity~related, environmentally
concerned compan y.
The campaign was designed not on ly
to reinforce the new name and corporate
identity, but to inform our customers and
others about the company's key environmental and community relat ions programs. During this time, BH C was gearing up to comply with the new lead and
copper rule, partnering with two local
hospitals to edu cate the public about the
hazards of lead ex posure to children and
beginning to aggressively market selected
parcels of 2,000 acres of its surplus, offwatershed land.
W ith this as a backdrop, we designed
and implemented targeted communica36
NAWCWATER
tions programs, incl udi ng advertising,
based on the following objectives and
strategies:
Ob jectives
A. Increase customer and target audience awareness of the new name of
BHC's parent company and its new
corporate identity.
B. Increase target audience awareness
of key BHC communi ty rel ations programs.
C. Increase customer awareness of BHC 's
program to comply with EPA's new
lead and copper rule.
D. Inform customers and target aud iences of BHC's efforts with two local
hospitals to provide lead exposure
education throu gh bill stuffers, hospitals and phys ician offices.
E. Educate cusromers, elected officials,
land trust and opinion leaders about
BHC's surplus land sales program.
F. G enerate sales leads for advertised
parcels of land.
St",-ategies
A. Position the name change for BH C's
parent and its new corporate identi ty
to reinforce the company's 'diversification into water~quality-rela ted businesses and its concern for the en vironment. Inco rp o rat e th e n ew
identity system in each advertisement
to increase targe t audience awareness.
B. Incorporate BHC's community rela~
tions program in issue ads and other
communications to demonstrate th at
BHC not only complies with the
spirit, but meets or exceeds regulatory requirements.
c.
Create an education program that not
only explains BHC's land sales program, but positions it as one way to
help the company make the capi tal
investments necessary to meet the
filtration requirements of SOW A.
D. Incorporate the key messages of the
land sale education ad in the display
ad listing parcels for sale.
Changing Your Identity
In early 1990, the board of directors of
Aquarion Company, formerly The H ydraulic Company, adopted a new strategic plan
that called for the company to capitalize on
its strengths as a public water supplier by
diversifying its operations into water~qllal~
ity~ rel ated businesses. Following a year of
working with a design fum, the new corporate name, logo and corporate identifY sys~
tem were developed. Following shareholdet
approval at the company's annual meeting
in the spring of 1991 , the name Aquarion
Company was adopted. The move was de~
signed to signal to the investment conuTIU~
nity that Aquarion was diversifying into
environmental testing laboratories as a natu~
ra l outgrowth of its utility subsidiary's water-quality orientation.
A comprehensive communications pro~
gram was designed and implemented to
announce the ch ange to our various
stakeholders-employees, custo mers,
shareholders, regulators, ana lysts and porti
folio managers, and state and local elected
officials. Actions included briefing em~
ployees before the change was implemented, issuing a news release foll owing
approval at the annual meeting, givi ng
employees a memento imprinted with the
(continued on page 38)
This is not just a sale. It's a
solution for the next century.
Some used for
recreational purposes.
Some for development.
We are interested in
discussing our land sale
policy, and our available
land with city, town and
state governments, with
civic groups, community
clubs and developers.
Because we are all
neighbors in this together.
The money we get for
this land will be invested
in improvements in our
water supply system.
Improvements needed
to guarantee the quality
of your water supply well
into the next century.
And, it will allow us
to make those improvements while keeping any
necessary rate increases
to a minimum.
Over the years, more
than a hundred now,
land has always been a
part of our business that
we've loved.
We've bought a lot of
it. We've sold a lot of it.
And, all of it has been
better off because we
owned it, if even for a
little while.
We preserved it.
We cut scrub and
undergrowth. Always
being aware of our
responsibility to the
environment.
Sometimes even in
awe. For we have
learned much about how
man and nature can
nurture each other.
Today we have about
2000 acres of land for
sale, land that we no
longer need to insure
the quality of our
water supply.
Land that the
Connecticut State
Department of Health
Services and we call
"off-watershed" land.
Land that we intend to
offer for sale in a gradual
and orderly process like
we always have, taking
the time to establish
environmentally sound
and sensitive priorities.
Land that could be
better used.
Some kept, as it is,
forever.
For more information, or
to arrange for your
corporate, civic or
community group to view a
slide presentation of our
land sales policy, write or
call: Ms . Maureen Shea ,
BHC Land Management,
One Canal Street,
Westport, CT 06880,
(203) 227-2345.
Aquarion's principal businesses
are public water supply and
environmental testing laboratories.
BHC customers and community leaders were concerned that the company was selling land that contributed to its water supply or could affect water
quality. To correct this misconception, BHC embarked on an aggressive advertising and communications program to inform the public it was selling offwatershed land which was no longer needed to ensure the quality of the company's water supply. The ad also generated requests for presentations on the
subject from community groups.
WINTER 1992
37
Communications Reach , continued
new name and logo, and designing a spe~
cial customer bill insert describ ing the
change and the reasons behind it.
The capstone to our communications
program was an adve rtisement that ran in
the New York Times, Wall Street Journal,
and in newspapers serving BHe's service
territory. It emphasized our commitment
to public water supply, explained our wa~
ter~quality~related diversificatio n and
showed how the new name and logo con~
veyed these themes.
As part of the communications effort,
we mailed reprints of the ad with a cover
letter explaining the reasons behind the
name change to opinion leaders, elected
officials and other targeted audiences.
The resu lts? The name change was
implemented without a hitch and our tar;
geted audiences were fu lly informed abou t
the name change. A lthough some people
are still not fully aware of the change, we
have made great progress in achieving a
broad unde rstand ing.
Getting The Lead-And The
Word-Out
In the fall of 1991, BHC and its SWC
subsidiary were already testing various treat;
ment add itives to reduce the corrosiveness
of its wdter to comply with EPA's new lead
and copper in drinking water standard,
which became effective January I, 1992. As
an outgrowth of our community relations
activ ities, we also were discussing at this
time how we could "partner" with Bridge;
port and Stamford hospitals in a project
that would be of interest to both our cus;
tamer groups. In light of the attention being
given to the effects of lead exposure on
children, a lead education pamphlet was a
natural choice.
Through a partnership with the Bridgeport and Stamford Hospitals, the company
made information about lead and its effect
on children ava ilable to every pediatrician,
obstetrician, family ph ysician and internist
in the communities we each served as well
as our customers. In Bridgeport, the city's
health department had received a grant to
conduct blO<Xl tests on inner;city children
to detennine if they had elevated lead levels
in the ir blood. Unfortunately, the city's sur;
face lead testing device, which is used to
locate sources of lead in the home of a child
whose tests show high lead levels, was
38
NAWCWATER
broken. BHC and Bridgeporr H ospital
jointly made a contribution to the city to
have the machine repaired.
T hrough the advert isi ng campaign, we
were able to allay ou r customers' concern
that their d rink ing water could con ta in
high levels of lead and show how our
community relations activities supported
the company's business activities. The ads
and our customer bill inserts made our
customers aware that they could have their
water tested for lead for only $10 per
sample, half of the cost of a commercial
lab test, and receive a pamphlet about
preventing lead exposure in the home.
The resu lts? The company recclved
solid publicity about its actions and the
water qua lity control department received
hundreds of calls requesting tests for lead.
There's More to Water Quality Than
Meets The Eye
Beginning in 1991, BHC began a massive capital spending progmffi, totaling some
$90 million, to build or design two filtration
plants to comply with the Safe Drinking
Water Act and its amendments. Knowing
that these projects, along with the company's
ongoing capital expenditures, could cause
customers' water bills to almost double by
the end of the decade, BHC began communicating the impact of compliance on future
water rates.
In add ition to the normal commun ica;
tions ac tivities, such as news releases,
ground;breaking ceremo nies, ongoing
news articles in the local press, and infor;
mational bill stuffers, BHC produced an
advert isement. The ad con veyed that
BHe was not only anxious to improve
water quality, but interested in improv~
ing the quality of life in its community.
So, in addition to highlighting our filtration construction program, we also noted
BHe's involvement in th e city's Adopt;
A;School Program and "Proj ect Santa."
The Good Eat·tl,
A lthough, over the years, buying and
selling land has always been a pa rt of
BHe's water supply business, some BHe
customers and community leaders became
concerned that the compan y was selling
land that contribu ted to its water supply
or could affect water quality. To over;
come this misconception, we developed a
comprehensive communi cations plan to
support our land sale program. Our goal
was to accomplish three things: Diffuse
public opposition to our land sales ; s.llland;
and support BHC', business objectives.
O ur communications program consisted
of briefmg company employees and those
who act as liaisons to our service towns so
they could explain the issue one;on.;one
with town leaders; bulletin board posting;
coverage in the company newsletter; creat·
ing a slide presentation for town officials
and community groups; creating a brochure
that summarized our presentation; and, ed i;
torial and news reporter briefmgs. But the
corn erstone of our communications plan
was an aggress ive advertising campaign to
educate and inform all of our publics about
our land sales program.
The advertisements were designed to
run in two phases: an education ad to
fully inform and educate our publics about
our land sales program and to generate
presentations to town officials, interested
civic and environmental groups; and, a
display ad that not only listed the parcels
of land for sale, but contained key information from the education ad to ensure
that our message reached the broadest
audience possible. T o keep our employees
informed after their briefing sessions, cop~
ies of the ads were placed on company
bulletin boards.
The result? The education and display
ads, placed in the local news media, ge nerated more than 120 calls for informa~
tion on specific parcels listed for sale.
SHe is currently in negotiation or under
contract for several parcels of land. And
the land sales were accomplished without
public opposition.
In additi on, numerous requests were
received for presentations to town offi ~
cials, land conservation and environmen;
tal groups.
Conclusion
When used in conjuction with a full
commun ications plan, advert ising can be
a hi ghly cost;effective method of achiev;
ing you r objectives. It is the most visible
strategy, with the broadest reach, and can
pave the way for other communications
efforts. Aquarion wi ll continue to use ad;
vertisi ng as a key part of its marketing
communicat ions program, based on our
success in reach ing its targeted audiences.
And by con ti nuing to use the new logo
and name in each ad, the new corporate
identity will be reinforced. ~
Preserving Primacy in Missouri
by Terry L. Gloriod
Vice President, Production & System Operotions
St. Louis County Water Co.
HB 1393 was signed into law on July
29, 1992 by Missouri Governor John
Ashcroft. The bill established a customer
connection "primacy" fee to be collected
by wate r suppliers for depos it in the Missouri Safe Drinking Water Fund.
The bill sign ing culminated an effort
that had begun months earlier when representatives of six different organizat ions
met with the State Department of Natu-
ral Resources (DNR) to discuss the issue
of funding the State Primacy Program.
The DNR reported that they would be
forced to give up Primacy after 1993 unless a funding mechanism could be put in
place. With a fai led attempt in the prior
legislative session, the DNR believed a
new leg islative effort cou ld only succeed
if initiated by water suppliers. Even then,
chances for success were estimated to be
very slim.
The organizations interested in preserv,
ing Primacy included the Missouri Chapter of NAWC, Missouri Section of
A WW A, The Missouri Association of
Municipal Utilities, Missouri Rural Water Association (MRWA), Missouri Watcr and Wastewater Conference, Missouri
Wa ter Pollution Contro l Federation and
Missouri ASDW A representatives. From
this group, Frank Pogge of the Kansas
City Water Department, then Chair of
Missouri Section A WW A, established a
Missouri Water Industry Coordinating
Committee (MWICC).
An Ad-Hoc Legislative Committee of
the MWICC was appointed. The Ad-Hoc
group consisted of Frank Pogge, Kansas City
Water Dcpartment; John Witherspoon,
Springfield Utilities; Dennis Flanery, Jackson County Water District; Jerry Lane, Mis-
souri DNR; and Terry Gloriod of St. Louis
County Water Company.
The Ad-Hoc Committee produced a
draft bill, and then relied on the com-
professionals such as W illiam Gamble,
who has worked avidly for the Missouri
Chapter ofNAWC for the past five years.
While his efforts and the efforts of the
Chapter have most often focused o n
avoiding "bad" legislatio n! the Primacy
Fee Bill required "pushing" a bill through
inches in size shalt not exceed five
dollars; for customers with meters
greater than two inches but less than
or equa l to four inches in size shall
not exceed twenty-five dollars; and
for customers with meters greater
than four inches in size shall not
the legislative process. NAWC and the
exceed fifty dollars.
other organizations had managed to draft
a bill that gai ned the unan imous support
of all organized interest groups. The only
opposition that ex isted came from within
the legislature itself. Gamble's efforts focused on education of the State Representatives and Senators about primacy,
the desire to retain it, and the need for
resources that had not been forthcoming
fro m Genera l Revenue approp riat ions.
During the critical Committee hearings
(4) Customers served by multiple
connecti ons shall pay an annual user
fee based on the above rates for each
connection, except that no single
facility served by mu lti ple connec~
tions shall pay a total of more than
five hundred dollars per year.
7. Fees im posed under subsection 6
of this sectiun shall become effect ive
and floor debates, the MWICC organiza-
on August 28, 1992, and shall be
tion proved essential in gett ing the mes,
sage of support to Missouri Legisla tors.
collected by the public water system
serving the custome r. The commission shall promulgate rules and regulations on the procedures for billing,
coll ection and delinquent payment.
The fee portion of the bill is best described by the actual language contained
therein:
Fees collected by a public water sys(2) The annllal fee per customer se r~
vice connection for unmetered customers and customers with meters
not greater than onc, inch in size,
tem under subsection 6 of th is section are state fees. The annual fee
shall be enumerated separately from
shall be based upon the number of
lected in monthly, quarterly or annual increments. Such fees shall be
transferred to the director of the de~
partment of revenue at frequencies
not less than quarterly . Two percent
of th e revenue arising from the fees
service connections in the water sys,
tem serving that customer, and shall
not exceed :
1 to l ,OOO connections
1,001 to 4 ,000 connections
4,001 to 7,000 connections
7,001 to 10,000 connections
10,001 to 20,000 connections
20,001 to 35,000 connections
35,00 1 to 50,000 connections
50,001 to 100,000 connections
More than 100,000 connections
$2.00
$ 1.84
$1.67
$1.50
$1.34
$ 1.1 7
$1.00
$ .84
$ .66
all other charges, and shall be col-
shall be retained by the public water
system for the purpose of reimburs,
ing its expenses for bill ing and col,
lection of such fees.
While the suppleme ntal fees will cer-
bined work of the leg islative liaisons of
(3) The an nual user fee for custom-
ta inly help in preserving Primacy, a con,
ti nued effort will be needed to ensure
that funding from general revenue keeps
pace wi th the increasing requirements.
NAWC and MRWA to carry the bill.
This effort proved the worth of skilled
ers hav ing meters greater than one
inch but less than or equal to two
(continued on next Ixtge)
WINTER 1992
39
annual testing was eliminated , favoring
instead testing at the frequency required
Preserving Primacy, continued
has rule making authority over the Safe
Drinking Water Program. The nin e· mem,
ber Commissio n has four water suppli er
represen tatives and five representatives of
changed the State Drinking Water law. The
under the Federal SOW A.
The final provision of HB 1393 wor-
former statute required that all water sys~
thy of no te related to the administra·
the general public. Rulemaking and en-
tems be tested on an annual basis for all
contaminants regulated llllder the Federal
1986 SDWA. The annual testing requirement had been championed during the late
tion of the Public Drinking Water Program. Prior to HB 1393, the Department
fo rcemen t of rules is now ex pected to be
accomplished o n a mo re equitable and can·
sisten t basis with the Commission in place.
O ther provisions of the bill materially
1980's by environmental interest organiza~
tions. At that time, water suppliers had ar. .
gued against testing at frequencies different
from the Federal monitoring requirements,
pointing out the extreme resource require . .
ments. We lost the argument and annual
testing was enacted into law. With HB 1393,
of Natural Resources had complete au·
tonomy in administering the Missouri
Drinking Water Law. A State Safe
Drinking Water Adv iso ry C ommittee
was in place to discuss and make recorn·
mendations, but the Commi ttee had no
authority over the Department of Natu,
ral Resources. HB 1393 pu ts into place a
Safe Drinking Water C ommiss ion that
HB 1393 serves as an example of what
can be accomplished when the Public Water Supply Industry and other public organizations work togethe r in a common
cause. The strength of the Missou ri WICC
will undoubtedly co ntinue to be a corner'
stone of support for water supplier inter,
es ts within the Missou ri Legislature. t
Hurricane Response
by Roger Ytterberg
Regional Manager, South Florida Region
Florida Cities Water Company
Some utility systems resort to mock
disaster to test the efficacy of their eroee. .
gency operations plans. The problem
with mock d isas ters is that the c ircum . .
age tanks and to fill other tanks lest
they float in high water. Lift/pumping
In [esponse to a plea from Florida
Department of Env ironmental Regula.
tion (DER), FCWC was in a position to
offer help to Collier County Utilities,
stances are generally textbook in their
station voice reporters were deactivated
to prevent them from dominating the
radio system. We were as ready as we
predictability and the response o mits the
knew how to be!
Copeland. The latter was especially grati,
Everglades C ity, and th e "city" o f
adrenaline factor. We had no such defi-
When the hurricane roared through
cienci es in o ur dri ll when Hurricane
South Collier County, sparing Lee County,
fy ing because their power was down and
had been down since the hurricane
A ndrew visited South Florida. T he cir-
we were, thankfully, in a position to help
struck Monday morning. We brought
cumstances were all too real and the
adrenaline rush, sustain ed for an ex·
tended period , generated an extraord i.
nary ability to accomplishment as we ll
as a genuine let, down when the crisis
others. We quickly focused our attention
on Golden Gate (one of our divisions lo,
cated in Collier County) which was with,
them sufficient generating capacity and
staff to get the ir water/wastewater util~
ity up and running until their no rmal
power was finally restored.
What did we learn from the exercise ?
The lessons were numerous and diverse
had passed.
The drill began on Friday, August 2 1,
when the hurricane warnings had to be
taken seriously. Throughout Friday and
Saturd ay as A ndrew continued it's ad·
vance to the Florida coast, materials were
J
au[ power, then Miami, then others. The
Saraso ta Division supplied us with genera,
tors and tar paper. Other generators came
fro m Po inci ana, Barefoo t Bay and
Hillsborough County as they couldn't be
begged or bo rrowed locally . Paul
Bradtmiller, Executive Vice President of
Florida Cities Water Company (FCWC),
including such things as: in the wake of
a d irect hit fro m a hurrica ne, th e onl y
vehicles mov ing are those with four
wheel dr ive and they had better be
offered his time (and his ability to speak
diesel po wered o r they wo n't be mo v·
ing long; aluminum fasc ia and soffits
can be cheap and attractive but they
become flying razor blades when a hu r~
ricane hits. Then, too, we demonstrated
so me deficiencies in our communica·
ti o n system, including the n eed for
Green Meadows and Fiesta Village in
S panish) to ass ist. O ur crews came back
portable cellular phones, and the fact
the eve nt the plan ts were inaccessible
after the hurricane hit. Emergency food
supplies were d istributed , and the signal
was sent to top·off all of the water stor,
with tales of everything from National
that the staff mem bers who function
best are the ones who have peace of
mind as far as the safety and security of
their families are concerned.
collected and assembled, tanks filled,
emergency equipmen t was tested once
again. By Sunday afternoon, the attack
was eminent. The battle plan was drawn ,
staff ass ignments confirmed. Individuals
were ass igned to spend the night at
40
NAWCWATER
coordinated some activities out of Sarasota.
We took generators, chain saws, food, wa,
ter, gasoline, propane, lumber and roofmg
materials to Miami. Michael Acosta, se,
nior engineer, was on vacation but he
G uard roadblocks to road "pirates" who
were relieving Good Samaritans of their
supplies.
System Trends in the 90's
for Utility Companies
by Barry Strock
Barry Strock Consulting Associates, Inc.
This is the tenth anniversary of the
release of the IBM personal computer. In
the 1970's and 1980's it was necessary to
ha ve experienced programmers to use
computers. T oday, accountants and clerks
are able to use personal computers with;
out much formal training. In the 1990's
utility co mpanies will be searching for
total information solutions, not just hard~
ware. A total information solu tion incor;
porates the software of choice, the hard~
ware required, and extern al devices such
as bar code reader/ printers and handheld meter readers to fur ther support the
software. There are several issues needing
consideration with planning to purchase
a computer system:
H ardware
Hardware prices over the last 10 years
have plummeted and are continuing
to drop. The price performance (or
bang for the buck) of current hardware was non imagined a decade ago.
Consequently, hardware cost is be;
coming a less important component
of total information system solutions.
Software
Software developers are more often
using new tools such as fourth gen;
eration languages, open architecture
for operating systems (e.g., Unix),
relational databases, ad hoc report
writers, and various other tools to
provide more flexible system solu ~
tions for utili ties.
Systems People
Data processing people are being rei
placed by end users. Data processing
professionals were dedicated to main;
taining the computer and its soft. .
ware first, with secondary emphasis
on the users. Most emerging systems
are designed for end users and the
clients they serve. An end user could
be a utility customer service repre;
sentative or the meter reader in the
field. Utility customers are seeking
more sophisticated budget payment
plans which require utility compa;
nies to know more about the indi~
vidual consumption patterns of eli;
ents over several years of service.
Utility Operations Philosophy
Utilities are being forced to run more
efficiently and to provide more in ~
formation to their cListomers and to
regulatory agencies. Systems with
integrated work orders and service
orders are serving as tools to increase
productivity and reduce costs within
the processing of information and
work tasks within the utilities.
Functionality
With more consumer advocacy and
rules mandated by public service
commissions, the traditional func ..
tionality of utility software packages
is beginning to change significantly.
For example, some utilities must go
through a notification process prior
to turn ing off service and need to be
able to more thoroughly track and
document activities such as inspec;
tions or shutting off services.
Peripheral Devices
A peripheral device is any device
not included in the main computer.
Relatively common peripheral de;
vices such as laser printers, scanners,
bar code readers and hand held meter
reading devices are no longer luxu;
ries but necessities.
Innovations in information processing
are allowing utilities to be much more
efficient and cost effective.
For example, one utility with less than
10,000 customers had ant iquated infor~
mation technology which was not pro~
viding good accounting of costs and ex~
penses. Its system needed 11 full-time
programmers. This company should need
no more than three systems professionals
(continued on next page)
WINTER 1992
41
Systems Trends , continued
with a modern end user sys tem, thereby
red ucing its annual operating costs by
more than $ 1 mi llion dollars.
Another utility had in ves ted several
million do llars in a hom e~grown system
which needed ano ther $ 1.3 million in
systems enhancements after the state pub~
lic service commission mandated new re~
quirements. After a thorough research of
the market with the use of a consultant, it
purchased a turnkey system for slightly
over $500,000. This was less than 40% of
the ori ginal es timate of $1.3 million as
provided by the incumbent firm who wrote
the software.
Just as most people would not th ink
about building th eir own car from scratch,
it is equally unthinkable to consider building or maintaining a uti lity computer sys~
tem from scratch. Except fo r a very large
company, mos t ut ilities may be be tter ser~
viced by end ~ user turnkey da ta processing
solutions. Downsizing or ri ght~siz ing the
data processi ng staff and expense is a con ~
ccpt that is quickly being considered by
utilities. Utilities should have indepen~
dent professionals look at any system up~
grade OJ' purchase. Often in~house da ta
processing professionals with a ves ted in~
terest in jobs, budget and infl uence may
not recommend inexpensive and less la~
bor intensive systems.
In some cases, in~house professionals
are not aware of the abu ndant ava ilability
of mode rn system solutions. One com~
pany was printing hundreds of pounds of
paper every night as an auxiliary backup
to its mainframe. A local area networked
fil e server could have been a cost~effec~
tive backup, but the mainframe orienta~
tion of this in-house staff had precluded
this contemporary technology as not be~
ing adequately designed to meet th eir
needs.
Most hardware becomes obsolete within
about five years. O bsolescence does not
happen because the systems are no longer
function ing, but ra ther because new tech ~
nology is making maintenance costs more
expensive than the purchase of a new
system with much reduced maintenance
CO!-its. A lso, what you can purchase in th e
new systems so Significantly exceeds that
of existing hardware that it may be more
costly to n urse old h ardware along than
42
to replace it. Finally, older hardware in
many cases needs large ai r conditioned
rooms whereas newer equi pment may re,
quire a smaller n on~air cond itioned space.
For example, one company had a roo m
filled with hard ware to store 2 million
pages of data, whereas a new tape backup
device smaller than a pack of cigarettes
can store 5 million pages of data. This
reduction in hardwa re and space require ~
ments is drastically changing the role that
data processing operations have had in
the past.
When a utility plans either to upgrade
an existing sys tem or purchase a new sys~
tern it should undertake at a minimum
the following steps to ensure a successful
systems procurement and installation pro~
cess:
1. Management Plan
A sho rt analysis to determine man~
agement goals vis a vis the quali ty
and cost of service of management's
data processing operations.
2. Inventory: Needs-Hardware/
Software .. Process Procedures ..
Forms~ Vo lume
T his process is often overlooked but
is essential to understand what you
have and why you are using what
you are. Too often, antiquated sys~
terns are being used because we a1~
ways did it this way.
3. Needs Assessment
An independent assessment of needs
to determine the company's overall
requ irements. Ma ny utilities just buy
new equipmen t because their o ld
hardware is too slow and a salesper~
son talks them into upgrading. Do
not upgrade without asking competi~
tors in to at least learn what they
have to offer and at what price.
4. Request For Proposals
Write a request for proposals. Even
if you want to do business only with
the incumbent vendors (hardware
and software), you may be su rprised
at what price and functi onality they
propose if they think the RFP is going ou t to their competitors.
5. Evaluation of Vendor Proposals
When evaluating the vendor pro~
posals be sure to have at least three
to five on~si te demonstrations of the
software and the n be sure to visit at
least twO comparable client instaUa~
tions from two vendor finalists. Dem~
onstrations and o n~s i te vis its have
produced some very in teresting and
surprising results.
6. Contracts and Negotiations
Typically vendors tell clients that
their standard con tracts cannot be
changed. Do not believe them. I f a
system is competitively purchased,
most vendors will fi nd a way to ne~
gotiate a contract with more favo r~
able terms and conditions if they
thin k th ey may lose the business.
7. Preparation for Installation
Prior to any installation a formal fit
analysis should take place in which
all parties agree in writing about how
the client will change to fit the new
hardware/software and how the software vendor will change to fit the
client's needs. No system will fit any
one client without any changes. The
hardware installation may require less
physical space but different commu~
nications. Do not assume that it is
best to save money by using old wir~
ing, old power supplies and old proced ures. O ne client had a seven~part
purchase order with its old system,
whereas with the new system it
needed only a three part~form. It was
diffic ult to persuade clients to elimi~
nate the addi tional four parts of the
fo rms. Conversion will be a critical
task in the installation of a new sys~
tem. Be sure the options that are
available to convert data have been
thoroughly though t about and priced.
8. Monitoring the Installation
System changes do not happen auto~
matically and without pain and suffer~
ing. A very structured installation pro'
cess should be instituted that includes
regularly scheduled meetings between
the vendors and the client at routine
intervals with formal written min utcs
and agendas. This will make the process much more orderly and will pro'
vide legal documentation as to what
everyone agreed to throughout the i l1 ~
stallation process. ,
NAWCWATER
?
Welcome to • • •
Our Newest Active Member
Companies
Moongate Water Co., Inc.
Organ,NM
John F. Guastella
Guac;;tella A ssociates, Inc.
Peapack, NJ
Champion Hill Development Cotp.
Carthage, NY
Nittany Water Co.
Howard, PA
Crystal Bay Water Co.
Stockton, CA
Rand Water Co.
Fishkill, NY
Duke Power Co.
Anderson, SC
Sunhill Water Cotp.
Garden City, NY
UNUM Life Insurance Co. of America
Portland, ME
Dutchess Estates Water Co.
John Kiernan
Poughkeepsie, NY
Swan Lake Water Co.
Garden City, NY
Hilton Head Plantation Utilities, Inc.
Hilton Head, SC
Technology/Hydraulics, Inc.
Austin, TX
Francis A. Hutchinson
Jewett City Water Co.
Needham, MA
Marrk-V Water Co.
Elida,OH
William S. Howard
Camp Dresser & McKee
Edison, NJ
Our Newest Associate
Members
Rick Albani
Meyers Water Co.
W ade Miller Assoc iates, Inc.
Napa,CA
Arlington, VA
lonic5, Inc.
Watertown, MA
Robert Kosian
C itibank, NA
New York, NY
Tom Pickens
T. B. Pickens & Co.
Locust Valley, NY
Jay Shutt
Floyd Browne Associates, Inc.
Marion,OH
Radio Watch In Action
by Roger Ytterberg
Florida Cities Water Co.
In co njun c tion wit h NAWC's
Radio Watch program, Deputy Carol
Crews of th e Fort Myers S heriff's
Departme nt h e ld three training ses~
s ions for Florid a C iti e s Water
Co mpany's Fort Mye rs staff o n Octo-
ber 20, 22 and 23. A to tal of 52 people
recei ved o ne ho ur train ing.
Shortly after the fin al session, one of
the trainees had a c hance to put the
program in to ac ti on. O n Frid ay
afternoon, October 23, within hours of
complet ing the training, one of our meter
readers was out on routine assignment
when she noticed two men in a van who
appeared to be "casing" houses in the
gating the suspects. S ubseque ntl y,
they we re handcuffed and removed
from th e n eighborhood.
neighborhood. The mens' behav ior might
End of story. Except th at this see ms
not have been so susp icious had not the
meter reader's consciousness been raised
by the training.
Fee lin g so me thin g was "j ust not
quite right/' she called th e d ivision
o ffice (fo ll owing direc tions received
to be a textb ook case of the Rad io
t hat day), the dispa tch er ca lled 9 11 ,
and within five minutes the sheriff's
department wa s on th e scene in terro;
Watc h program at work. A t the ve ry
least, misch ief wa s ave rted; perhaps
muc h mo re than th at. At any rate,
the public was o nce aga in well;se rved ,
and we had a part in it. As the me ter
reader sa id, "It was scary. J d idn't wa nt
to get in volved, but it fel t goo d to be
able to do somethin g positive." ,
WINTER 1992
43
The Dilemma of
Taxation of Contributions . .
In . . Aid of Construction (ClAC)
by Stephen j. Densberger
Vice President
Pennichuck Water Works, Inc.
The T ax Reform Act of 1986 changed
the tax status of Contri butions~In~Aid of
Construc tion (CIAC) received by ut ilities. The 1986 Act requires that CIAC be
recognized as revenue in the year the util ~
ity receives the contribution. In doing so,
the Federal Government has created a
situation wh ich discourages the takeover
and operation of small , inefficient, poorly
run satellite water systems by larger pro~
fessionally operated invcstor~owned pub~
lic water utilities. Failure to re move this
barrier may create serious public health
and safety problems in the future . Con ~
gress must insure that the collection of
revenues by the Federal Government does
not conflict with, nor se rve as a disincen~
tive to, achieving more important public
health and safety goals, namely, compli ~
ance with the Safe Drink ing Water Act.
Pennichuck Water Works is an inves . .
tor~owned public water utility in Nashua,
New H a mpshire. The company was
incorpora ted in 1852 and grew with
th e comm unit y of Nas hua. Today ,
Pennichu ck provides water service to a
population of about 100,000 and to business and industry in seve ral communi ties
in the greater Nashua area. Pennichuck's
origina l service area was contained within
the city limits of Nashua. In the 1960's
the neighboring community of Merrimack
needed a larger supply capability to se rve
an industri ally zoned area of the town.
The area abutted the franch ise boundary
of Pennichuck. Local and state officials
44
supported the expansion of the
Pennichuck franchise and distribution sys~
tern to serve this growing area. This effort
began the regionalization of water service
by Pennichuck_
In morc recent years, Pennichuck has
acquired sma ll, satellite systems in neigh~
boring towns in southern New Ha mp~
sh ire. Thcse satellite systems were typi~
cally constructed by developers to serve
residential subdivisions in areas where no
municipal,scale water service was avail,
able_ Community Water Systems (CWS)
were constructed instead of individual
wells because a community water system
was more economical to build and, in
many towns, property may be developed
more densely when community water and/
or waste sys tems are constructed.
Some of the community water sys tems
which Pennichuck acquired were in bad
shape. Interruptions to service, extended
outages and bacteria outbreaks were n ot
uncommon. In some pumping stations
equipment was inadequate or improperly
installed. Homeowners frequently co m~
plained to the N. H. Department of En v iron mental Servi ces (DES) (formerly the
Water S upply & Pollution Control Commission) and to the New H ampshire Pub~
lic Utilities Commission (NHPUC) about
the poor se rvice. DES asked some of the
larger, municipally operated water utili ~
ties to resc ue some of these small satellite
systems but the municipali ties declined
to get involved. In 1978, the Chairman
of the NHPUC informally asked several
of the State's larger investor~owned water
companies to consider acquiring the satellite systems and restoring them to proper
operation. The Chairman indicated that
the NHPUC would provide adequate incentives to make it worth taking on the
liability assoc iated with the acquisitio n of
the smale satellite systems. Pennichuck
responded affirmatively to the request and
became actively and aggressively involved
in the acqu isition of satellite systems in
the southern New Hampshire area.
Other in vestor~owned water utiliti es responded as well and in 1987 the Nashua
Region al Planning Commission and the
NHPUC established the Southern New
Hampshire Water Supply Task Force to
address regional wate r supply planning;
assess the competing interests of the investor-owned utilities; and look ahead at
how new, developing areas shou ld be
served. By 1990, many of the small, poorly
run sys tems had been acqu ired and the
frequent complaints and public h eal th
concerns were substantially reduced. As
new systems have been planned and con ~
structed, the investor~owned public u t il ~
ity companies frequently acquire these
new systems, thereby insuring proper co n~
struction and operation at reasonable rates
from the outset.
In an effort to keep water rates reason~
able, the utility compan ies typicall y do
not pay for the full replacement cost of
these utility systems. An acquisition price
NAWCWATER
i
is generally established which allows for
some capita l recovery by the owner hut
also reflects the risks and liability of
owning and operating a small water sys~
rem. The lower negotiated price is gener~
ally accepted by the NHPUC as the rate
base for the CWS and that value becomes the investment component in de~
tennining the appropriate level of water
rates for that CWS. The lower negotiated
price generally results in lower rates to
the customers than the rates which would
result if the Company paid the replacement cost value for the system. The ini~
tial cost of the supply and distribution
system not paid for by the utility com~
pany is recouped by the developer in the
price of the dwelling units.
The Taxation Dilemma
The 1986 Tax Reform Act reversed
the position establis h ed in Revenue
Ruling 77-177 which had exempted
contributions of capital to a utility from
income tax. The Act required property
contributed to a utility, particularly new
water main extens ions in stalled by
developers to se rve new subdivisions and
then turn ed over to the local utility
company, to be included in gross income.
The water utility is responsible for
payment of the tax. In some states, the
utility is allowed by the public utility
commission to gross up the con tribution
and collect the tax on th e contributed
property from the developer. In New
Hampsh ire, the utillty is required to pay
the tax. The NHPUC allows the tax to be
capitalized and included as part of the
utility's rate base in setting water rates. In
New Hampshire, the tax on CIAC leads
to a higher utility rate base which, in
turn, leads to higher water rates.
This tax is detrimental to a utility
company's cost of service regardless of
the size of the population served. How;
ever, the tax becomes extremely burden;
Some when applied to the acquisition of
small satellite water systems in New
Hampshire. In fact, due to cus tomer
backlash to high rates and the inherent
resistance of the NHPUC to allow the
necessary high rates, the tax on CIAC
becomes a disincentive for acquisition of
small, inefficient, poorly run sys tems by
larger private utility companies.
The government's objective of h av ing
private industry respond to the public
health and safety issues attendant with
small water systems is being thwarted by
the negative effects of the tax.
The Case Stud y attached illust rates
the negative impact of the tax on the
utility company's cash. flow and on
the ultim ate water c h a rg es to the
h o meowner. Richardson Estates was
acq uired by Pennichuck prior to the
repeal of the exe mpti on of tax o n
C IAC. Under today's tax regulation,
Pennichuck wou ld be forced to invest
$31,000 more into a system than the
company or ig inall y deemed prudent.
Homeowners who are already snug;
gling to make ends meet would be
forced to pay an additional $2 18 per
year for their basic water service .
The re-authorization of the Safe Drink;
ing Water Act will result in many changes
in the water ind ustry. Small systems will
be particularly hard bi t as they work to
meet many of the new requirements being set forth by the EPA. Water rates wi II
increase dramatically as small syste ms
implement changes to comply with the
new rules. Many of the new regulations
are important to public safety and health.
Capital from private industry will be
needed to make many of these important
changes. For example, the proposed new
rules for radionuclides in drin king water
will result in significant additional in;
vestment in treatment equipment and
water system modifications for the removal
of radon gas. Private capital will be critically important to implement many of
the needed changes.
The tax on C IAC diverts utility cap ital away from other important needs. The
tax on C IAC is bad legislation and must
be repealed. •
Pennichuck Water Works, Inc.
Richardson Estates
Case Study of the Impropriety of an Income Tax
on Contributions in Aid of Construction (CIAC)
Richardson Estates is a residential subdivision in East Derry, N.H. The project
consists of 18 duplex structures. The h omes were built in 1986 and a community
water supply was constructed to provide water service because no municipal water
service was ava ilable. The community water system consists of two deep bedrock
wells, a pumping station and 3,000 feet of 4-inch pipe. The housing units are
owned by people who are in the low-midd le to low income bracket.
The developer of the project was encouraged by the State ofN.H. Division of
Environmental Services (DES) to turn the water system over to a utility or certifi ed
operator. Whereas there were several investor-owned public utility water companies operating other water systems in the area, the developer decided to "sell" the
system to a utility company. He negotiated a contract with Penni chuck Water
Works of Nashua, N.H. to sell the system to Pennichuck for $12,600.
Pennichuck's investment, or rate base, is predicated on the negotiated pri ce plus
additional investment for acquisition costs and metering. The estimated replace;
ment cost for the system is $90,000. Under today's scenario of taxation on contributions in aid of construction, Pennichuck would also be required to pay federal
and state income taxes of $30,960 a:; a consequence of acqu iring this system.
Present average annual water cost per household $620
Average annual water cost after tax on CIAC = $838
Homeowners will be forced to pay an additional $218 per year for their water
service which is purely the result of the tax.
The Safe Drinking Water Act require ments are already placing a huge burden on
small water systems in the U.S. It seems unforgivable that the federal gove rnment
would add the burden of th is unnecessary tax to already over-burdened home
owners.
=
WINTER 1992
45
Executive Directorls Report
by James B. Groff
Writing this (relatively) short article every three months for WATER gives one
pause to reflect on the importance of such
musings. Frankly, I'm awed by the work of
syndicated columnists whose efforts are
broadcast far and wide. In our own little
world of NAWC, the distribution of W ATER magazine to the Association's membership, regulators, members of Congress
and their staffs and various offices within
EPA, issufficientto command (my) respect
and, undoubtedly, engenders a ce rtain
amount of trepidation.
Sometimes, those who have the oppo rtu~
nity to use power mightier than the sword,
perhaps because of the press of business,
have a tendency to focus on their own world.
There is, in fact, a responsibility to address
the relationships with the much larger sphere
of national, or even international, activities
in which all have an interest and can play
an important role.
For example, in NAWC's world, the Association with the adroit leadership of (now)
President Bill Holmes, held a most successful Annual Conference in Hilton Head ,
South Carolina. Program content and par~
ticipants were superb, and despite weather
that was less than perfect, I heard no complaints, thanks to the hard work of the dedicated individuals of Consumers Water Company and staff efforts guided by Mike Homer.
Parti cipants in this 96th conference in . .
eluded , in addition to our members, ind iv idu a ls rep resenting b us iness, t h e
U.S.E. P. A., environmental interests, consumers, regulators and others.
Excellent attendance at the general sessions and seminars demonstrated the investor-ow ned industry's interest in sub. .
jeers debated both formally during panels
and presentations, and informally during
social and recreational events. The sub . .
stance of the commun ication that took
place, ca rries far beyond the world of
Hilton Head , and what occurred there,
46
NA WC W ATER
will h elp promote und erstanding and
progress as these iss ues are pursued in
other forums throughou t the nation .
Yes, the annual conference was an important event for NA W C . A nother important event occurred on November 3,
when the people of th e United S tates
elected a new president and a new parry
to run the Executive Branch of th e governmen t. Historians, hopefully obj ectively, will evaluare the 1992 elec tions
and its impact upon the country, and perhaps the world. T oday is what is important for NA we, fo r now is th e time to
integrate our uni verse with the " new
world)) evolving in W ashington, D.C ., and
state and local centers of government
throughout the country, to ensure that
the in terests of our industry and its customers, are effi ciently and reli ably se rved.
The American political system is fascinating. World leaders, historians, poli tical practitioners and analysts of all stripes
and nationalities have studied it from all
sides. Far from perfect, most agree (although 1 had a few bad moments the
other day) it is still the best system in the
world today. Regardless, Americans have
bee n qu ite vocal about their discontent
with its performance. Members of Congress, as well as the president, have been
subj ected to significant criticism. While
much of this has been earned , certa inly
the vo ters must accept a share of the re sponsibility for those instances where it is
felt that the process has failed. Regard less, th rough the individuals elected to
offi ce and the messages sent to them by
personal contact, letters, telephone calls,
and FAX, A mericans ca n play a role in
the management of the co untry's affairs.
1993 will be a year of great change. Significant turnover in both the Senate and
the House, as well as in the Admin istration
(as many as 8,000 polirical appointments
will be made ) charges our Association with
both a responsibility and an opportunity.
NA WC is building its reputation on Capitol Hill. But with many new members of
Congress, the NAWC must now cultivate a
strong sense of con tinuity. It is important [0
be among the first on the doorsteps of the
new members and to be a part of their early
education. A t the same time, those who are
returning [0 Congress cannot be forgotten.
As they prepare for the new session, we
must be sure that they are reminded of who
we arc and what we expect.
There arc roles both for the staff and for
the members of NAWe. Certainly, the
Association's government affairs office and
Government Relations Committee will play
key roles, but the assistance, effort, adv ice
and foundations that the Association's members have with both returning and new members of Congress, as well as the Administration, are the key to success. The N A WC's
members, the voters, the constituents, are
the ones that can ensure the success of the
Asrociation's legislative objectives, and there
are a number of them.
Members of Congress-new and
reelected- will be hearing from a multi tud e
of organizations. N A WC, for its part, will
target those members who are key to tax
and drinking water initiatives. Accordingly,
involvement by all of NAWC's members is
essential.
NAWC
A number of positive things occurred
at the N A WC Board of Directors' meeting at the annual conference in Hil ton
H ead. The Board not only approved a
1993 budget, balanced with income equaling expenses that total $1.5 million, it
also elected for the 1992- 93 year, a new
slate of officers headed by Bill Ho lmes
(Consumers Water Co. ).
A t the Execu tive Committee's recommendation, the Boa rd also adopted ten
new, o r in some cases expanded , five yea r
•
goals for the Associa tion. They are:
(1) Become more proactive in the
reauthorization of the SDW A.
(2) Establish a presence in EPA to influence those issues that impact the
inve5tor~owned industry.
(3) Encourage and faci li tate privatiza;
ri on of municipal systems and pub,
lic,private partnerships.
(4) Aggressively pursue tax issues to pro'
vide greater equity between invcs,
tor,owncd and municipally,owned
water utilities.
(5) Improve communications within the
organizatio n , with emp hasis on
strengtheni ng tics between the na,
tion a I and its chapters, such that the
overall organization becomes more
effective in its legis lative and regu,
latory initiatives.
(6) Increase membership and further
consider inclusion of investor,owned
waste water utiliti es.
(7) Aggressively pursue organization of
ad dit ional state chapters.
(8) Continue a strong, assertive regul a;
tory relations program.
(9) Maintain a sound financial position
and rese rve.
(10) Promote investor-owned water utilities' contributions to the nation's public health and economic viability.
To acco mplish the above and recognizing th at NAWC's members would benefit by the Association focus ing more
fo rt on the b us iness aspect of th e
investor-owned water supply and related
management initiatives, the Board ap . .
proved the addition of on e professional
to NA we staff. The duties fot this individual will allow NA we to be more invo lved with EPA and other government
agencies such as OMB, Treasury, ctc.; purslle privatization (wh ich seems to be ga ining momentum in EPA); and allow greater
involvement in the reauthorization of the
Safe Drinking Water Act.
In regard to membership and chapter de~
ve lopment, at the time of this writing,
NAWC's membership st::mds at 359 active
members and, with the recent addition of
the statc of Washington, twe lve chapters.
Further, in addition to the j.j . Barr
Scholarship, the Association now, due to
the generosity of Utilities, Inc. and its
chairman, Perry Owens, has awarded a
second scholarsh ip, the David L. Owens
Scholarship, to a deserv ing student in
cr
1992. Our congratulations to both Kirk
T. Gavel and Bruce A. Utne.
Government Relations
In addition to the significant potential
for major tax legislat ion in 1993, it is very
likely that major steps will be taken in the
reauthori zation of the SOW A, as well as a
myriad of other legislative initiatives de~
signed to gain revenue for the Treasury. To
ensure that NA WC's members' business in~
terests are not compromised in this proccss,
the staff in Washington and the members of
the Association must recognize that it is
now more important than evcr to strengthen
relationships with members of Congress.
With that in mind, the Association hac; a
number of activ ities, detailed in the report
from the Director of Government Affairs,
to be pursued by both staff and Association
members.
EPA
The change in the Administration wi ll
mean that approximately 22 individuals
hol ding ap pointed posit ions in the
U.S.E.P.A., at th e assistant administrator
level and above, will leave in the near
future. (Resignations were requested just
prior to the election .) The vacancies thus
created will be filled with new appointees
who will require time to become familiar
with their new responsibilities. The pos i~
tion of Director, Office of Ground Water
and Drinking Water will not be affected
except that, at least for the immediate
future, the water industry can anticipate
seeing less of Jim Elder due to his involve ~
ment in the education of the new Agency
hierarchy. One only has to recall that
Democrats were pa rticul arly crit ical of the
lack of enforcement by the Agency, to
anticipate that enforcement will be a too l
to make th ings happen more quickly un~
der the new Administration, and that the
Agency will be perceived to be taking a
harder line on a number of env i ronmen~
tal issues. Given the num ber of new regu~
lations addressing such complex issues as
radian uci ides, dis infection/d is in fec tion
by~prodllcts , ground water disinfection,
lead and copper, etc., the water industry
could be in for an interesting time.
As most arc aware, EPA is facing a num~
ber of legislative, as well as court ordered,
regulatory deadlines. A major impediment
to meeting these deadlines, to say nothing
of the quality of the product to be delivered,
is resources. For example, the amendment
to the enacted appropriation legislation, re~
quires the Agency to provide a detailed
report to the Congress on implementation
of the SDW A amendments of 1986, including cost impacts, the regulatory process, etc.
However, Jim Elder's office has received
neither add it ional funds or people to ac~
complish this report, and there is a concern
that the study ultimately delivered will essentially be an old book with a ncw cover.
In a similar vein, an analysis that would
address th e nation's capacity to analyze
drinking water for current and evolving wa~
ter quality parameters, has not occurred in a
timely manner. The result is a perception
that there is sufficient laboratory capacity to
meet demand, when in reality the Agency
believes the opposite to be true.
The ongoing disinfection/di sinfection
by-p roducts (D/DBP) negotiated
ru lemaking is giving participants repre~
senting industry, utility, regulator, envi~
ronmental and consumer interests insight
into the problems EPA faces as it attempts
to develop reasonable water quality regu ~
lations. Missing is adequate science. Some~
how, Congress and the Agency must be ~
come aware, and positively address, the
need for more researc h in th e drinking
water area.
NA we is anticipating a great deal of
activity in the regulatory arena champi ~
oned by EPA, and must become a greater
influence in th e process.
Thanks
During his remarks at the annual meet~
ing of the Association's membership in
Hilton Head, President jay Weinhardt
described the progress the Association has
made over the past five years. I know that
all the Assoc iation 's membership recognizes
that that progress would not have been made
without the dedication and commitment of
people like jay. jay, as well as most of
NA we's leadership, are already very busy
as senior executives of investor~owned
water utilities. In Jay's case, as President of
San Jose Water, he was deeply involved
with a maj or merger. Regard less, he was
always there for the Association and some~
how always found time to superbly repre~
sent the NA we when meeting with law~
makers, regulators, chapter members and
numerous other occasions. It was a great
year, and Jay deserves all of our thanks for
his commitment. •
WINTER 1992
47
Regulatory Relations Report
by Sharon L. Gascon
Regulators Speak Out at
NAWC's Annua1 Conference
NA WC's 96th Annual Conference was
attend ed by 41 pu blic utili ty commission
regul ators. This continues the trend of
increased interest in this event by com~
missioners and commission staff, who look
to our conference as a means of providing
information and a forum for communica~
tion with the private and investor~owned
water industry.
Communications-Can We do Better?
O n the subj ect of communications,
regulators provided a number of sugges~
tions to the industry during a panel d iscussion on Tuesday. Commissioner Linda
Stevens, of N ew Hampshire, suggested
that th e industry become more proacti ve.
For instance, working collectivel y in a
state, or through NA we in Washington,
compa nies co uld develop seminars to
prese nt to their PU C on topics of special
interest. These seminars could be pat~
tcrned after the one on the SDW A and
financial status of the industry presented
by N A W C to a number of commissions
this year. Commissioner Stevens also suggested sending commissioners, on a regu~
lar bas is, articles and papers that discuss
curren t issues confro nting the industry.
Commissioner C harles Hughes, from
North Carolina, also recognized the be n ~
efits of special seminars. He po inted ou t
that they are a pa rticularly helpful mea ns
48
NAWC WATER
of providing generic information since
they do not interfere with ex parte rul es
that ban certain communications. He also
suggested that companies use N A W C as
a clearinghouse to transfer innovative
ideas that may have worked in other states
to the attention of other commissions.
Commissioner David Ziegner, from In~
diana, also felt that the industry needs to
wo rk harder at communication. H e
pointed out that the Indiana commission
has minimal contact wi th water compa~
ni cs, compared with other utilities. For
example, he has been asked to tour a
number of utili ty facilities but never a
water plant. He emphasized that the commission cannot regulate in a vacuum and
pointed out that companies should not
wa it until they have a rate case in progress
to bring techno logical and regul atory
mandates to the commission's attention .
I n closing, Commiss io ner Steve ns
stated t hat when NA W C's Executi ve Director, Jim G roff, asks stud ents at th e
NARUC Water Rate Seminar how man y
had ever visited a water t reatment plant,
very few raised their hands. When the
sam e question was asked about a winery,
brewery or distillery, almos t every hand
in the audience went up.
What is the Difference Between
Communication and Lobbying?
Commissioner Hughes feels that the
type of generic information N A we pro~
vides is essential communicati on for regu~
late rs and the industry. With respect to
NAW C dues, he feels they should be considered as an allowable expense. This affi rmed the o pinion ex pressed by
NARUC's now immediate Past-Presiden t
Kenneth G ordon, during his opening re~
marks, who commented that the work of
trade associations is an essential part of
condu cting business by an industry and,
therefore, a reasonable expense.
What about the SDWA
Reauthorization?
The A ct has gone too fa r in Comm is~
sioner Hughes' opinion. In North Carolina, compliance will pu t some water CO ITI ~
panies out of business and in many cases,
encourage people to use priva te we lls
again. He sees a need to educate the state's
legislators and plans to address this need
during a conference in 1993.
Con versel y, Commiss ioner Zieg ner
views his mandate to be one of policy
implementation and therefore it is inap~
propriate to participate in legislation de~
ve lopment.
N A RUC W ater Commi ttee Chairman
Paul Foran felt that PUCs do have an
important policy formul at ion role and
must put thei r expertise forward to legislative entities. He noted that, while PUC's
must ultimately enforce the rules, they
should still make their views on proposed
legisla ti ve an d regul ato ry initiatives
known. H e opined that this is the pri~
mary role ofNARUC.
Commissioner Stevens agreed that
some aspects of the SOWA, while aimed
at protecting health, may be the wrong
answer and commissions should weigh in
on the issues. She fe lt that it was the
industry's responsibil ity to provide legis~
lators with information that will assist
commissioners and their staff to partici ~
pate in the process.
What is the Element af Risk
for the Indust ry?
In Missouri, Commissioner Perkins
noted that return on equity for water has
exceeded that for gas and electric. Com~
miss ioner Hughes, noting that small
companies carry a lor of risk, commented
that his state water hearings generate a
great deal af interest due ta the health
aspects associated with providing a con~
sumed product. This factor, in itself, is a
unique risk.
Commissioner Stevens then suggested
that additional pressures on the industry,
such as least cost planning, uncertainty
regarding regulations, and construction
mandates also have contributed to in ~
creased risk.
Commissioner Ziegner agreed that com~
missions mList be cognizant of risks when
they address water company rates.
Commissioner Foran noted that, in
Illinois, least cost planning is a require~
ment for electric companies. If water
utility risk is similar to that of electric
utilities, some feel this requirement should
alsa apply.
Commissioner Hughes responded that
leas t cost planning concepts for electric
utilities may not be applicable to water.
Commissioner Perkins added that costs
are many times difficu lt to qualify and
quant ify, and there remains a question as
to whether least cost planning would be
considered a prudent approach or if it
would actually provide a savings.
Illinois has statutory provisions for pre~
approval of CWIP as a result of the public
outcry from nuclear plant constructi on.
W hile Commissioner Foran felt that the
water industry has done a better job of
documenting the cost impacts of capital
improvements, he cautioned that, if the
industry loses the ability to communicate
the facts to rate payers, the industry will
be subjected to the same type of statu tory
requ irements as the electric utilities.
Conservation-Should Lost
Revenue be Recoverable?
In the U.S., conservation is considered
to be a good idea, frequently without to~
tally thinking the process through. Water
is plentiful in the northeast, and Com~
missioner Stevens expressed her belief that
conservation mandates should be differ~
ent from those applied in water~short re~
gions of the country.
Commissioner Hughes felt that co n~
servation techniques should be applied in
such a manner to ensure that companies
are kept viable.
Commissioner Ziegner suggested that a
commod ity charge, or an automatic ad~
justment clause, be applied to compen~
sate companies for any decrease in rev~
enues resulting from conservation.
The above attests to the quality and
knowledge af a panel that provided valuable insigh ts relative to current regu la~
tory trends and needs of regulators and
rate payers alike. Throughout the discus~
sion, one point was emphasized again and
again: The industry has a responsibility to
keep both their regulators and their cus~
tomers well informed.
Water Products of the NRRI
The proliferation of nonviable small
water systems is one of the most pressing
issues with respect to water utility regula~
tion. "Viability Policies and Assessment
Methods for S mall Water Utilities" is the
most recent product from NRRI address~
ing small water systems and their regula ~
tion by state public utility comm issions.
The report is 276 pages in length and is
available for $41 from the NRRI publication office, 1080 Carmack Road, Columbus, Ohio 43210.
UMeeting Water Utility Revenue Re~
quirements: Alternative Financial and
Ratemaking Mechanisms" is planned to
be a research and policy report to state
public utility commissioners and staff that
is designed to help them assess cost im~
pacts and changing revenue requirements,
and make informed choices concern ing
a lternativ e financial and ratemaking
mechanisms available to water utilities.
The report is expected to be available by
winter of 1993.
Available in the fall of 1993, "Water
Conservation Responses" will be a re~
search and policy report which wlll iclen~
tify existing data bases and exam ine e l as~
ticity estimates. It can be used to assess
the impact of conservation upon water
utility revenues.
NARUC Goes International
International issues regarding the regu ~
lation of utilities are becoming increas~
ingly important. They are inter~related to
state regul at ion, particularly with respect
to economic development, commerce, e n~
vironmental protection and other aspects
of the global economy. Recognizing the
need to add ress these issues and strengthen
their focus and policy development,
NARUC has formed an Ad Hoc Committee on Internation al Relations. The com~
mittee will be composed of 12 commis~
sioners, o ne from each of the e ight
standing committees and four appointed
by NARUC's president.
NARUC Awards Utility Companies
for Excellence in Education through
Community Partnerships
NARUC immed iate Past-President,
Kenneth Gordon, presented the Thomas
P. Harwood, Jr. Excellence in Education
Award to the Entergy Corporation (New
O rleans, Louisiana) for its outstanding
uti lity \education partnership program.
During NARUC's 104th Annual Conve ntion, Entergy Chai rman and CEO,
Edwin Lupberger, accepted the award for
his company's program, "Entergy's Lit~
eracy Effort."
The NARUC last year established the
Excellence in Educat ion Awards program
to provide national recognition to exem~
plary utility/educat ion partnerships that
show significant progress in achieving the
National Education reform goals. Re~
sponding to the challenge that all Americans become involved in the effort to
improve and reform local schools through
implementing these goals, the NARUC
encourages local utilities to support these
efforts through establishing educati onal
partnerships in thei r communities, which
will effect sweeping ed ucational change.
In addition to presenting the award to
Entergy, Commiss ioner Gordo n an~
nounced awards of merit to Duke Power
Company (Charlotte, North Carolina) for
its "Power in Education Program"; the
East Ohio Gas Company (Cleveland,
(continued on next /Xlge)
WINTER 1992
49
........------------------------------
~
I
Regulatory Relations, continued
Ohio), for its "John F. Kennedy High
School/East Ohio Gas Partnership"; Cajun
Electric Power Cooperative, Inc. (Baton
Rouge, Louisiana), for its "Gift of Learning Partnership"; and Southern California Edison Co. (South El Monte, California), for its "Concept 2000 Partnership."
Entergy's literacy programs addresses
the fifth of the National Education Goals:
"Every adult American will be literate."
The program involves an 800 literacy
hotline; four automated literacy laboratories and three mobile automated literacy
laboratories. As oOune 1992, over 10,000
calls have been received over the hotline
and a total of 5,170 persons have completed literacy programs in the automated
labs. The success of the labs led to expanding the program to including high
school equivalency diploma or GED
classes. To date, 242 GED certificates h ave
been awarded to the participants.
NARUC Encourages Commissions and
Public Utilities to Provide
Greater Employment Opportunities
for Women and Minorities
During the Summer NARUC Com-
mittee meetings, the following resolution,
sponsored by Bruce Hagen, President of
the North Dakota Public Service Commission, was adopted by the NARUC
Executive Committee on July 29, 1992.
WHEREAS, There is a need to encourage greater employment opportunities for women and minorities in all sectors of the economy, including the public
utility and carrier sectors; and
WHEREAS, The U.S. Bureau of Labor Statistics reports that unemployment
rates for minority groups are n ationally
higher than the rates for other population groups in the United States, and the
unemployment situation for these groups
has been made worse by the recent economic recession the country h as faced;
and
WHEREAS, The Bureau of Labor Statistics also report that the percentages of
women and minorities that are employed
in the public utility and carrier sectors are
less than the percentages of women and
minorities employed Nationwide; and
WHEREAS, Many higher educational
institutions throughout the country have
programs designed to encourage minorities and women to study in the fields of
accounting, economics, engineering and
law; and
WHEREAS, The N ational Association of Regulatory Utility Commissioners
(NARUC), through its Office of Public
Relations, conducts surveys on member
State commissions concerning current employment opportunities and makes this
information available to higher educational institutions across the country; and
WHEREAS, Most State commissions
responding to these surveys h ave indicated that they have adopted equal
employment opportunity policies that
encourage the hiring of women and
minorities for all levels of employment at
State commissions, and some State commissions encourage their utilities and carriers to contract with women-owned and
minority-owned businesses; now, therefore, be it
RESOLVED, That the NARUC encourages all its member commissions and
the utilities and carriers they regulate and
the NARUC W ashington office to adopt
(or in the case where they h ave already
done so, to update) policies for promoting the recruitment and employment of
women and minorities, and encouraging
contracting with women-owned and minority-owned businesses. ,
NAWC's New Jersey Chapter presents awards to those who have made significant contributions to the water industry in the state of New Jersey. Shown above are
first year recipients of this award (I to r) : Chester A. Ring (Elizabethtown Water Co.), Robert A. Gerber (United Water Resources), James V. LaFrankie (American
Water Works Service Co.) and Loren Mellendorf (American Water Works Service Co.). Additional honorees were The Honorable Brendan T. Byrne (former NJ
Governor and Commissioner), William R. Cobb (New Jersey-American Water Co.) and George M. Haskew, Jr. (Hackensack Water Co.).
50
NAWCWATER
r
Recent Regulatory Decisions
by William R. Holzapfel
LeBoeuf, Lamb, Leiby & MacRae
Supreme Court of Nevada Upholds
P ublic Service Commission Discretion
in Valuation of Water Rights
In a decision dated December 20, 1991,
the Supreme Court of Nevada upheld the
Public Service Commission of Nevada in a
The Supreme Court refused to remand
the case to the Commission for further hear~
ings on the valuation of the water rights
stating:
The Commission was given no means
case involving the valuation of water rights.
by which to detennine the cost of Sil-
Silver Lai<e Water Distribution Company v.
The Public Service Commission of Nelllllia,
823 P.2d 266. The Supreme Court of Nevada upheld the decision of the Public Ser-
ver Lake's water rights at anything other
vice Commission to use original cost in
valuing water rights. S ilver Lake Water Dis~
than $732,000.00. In essence, Silver
Lake has gambled on its $732,000.00
figure, wagering that this court would
find the $75.00 award unconscionable
and send this case back to the Com-
Trustee contended that (1) the exclusion of
contribution s in a id of constru ctio n
("CIAC') was unreasonable and unlawful
and unsupported by substantial evidence;
(2) that the Federal Bankruptcy Law preempts the Commission's use of the CIAC
doctrine; (3) that he was a bona fide purchaser under Section 544 of the Bankruptcy
Code and thus able to void the CIACdesignation; (4) that the rate increase granted by
the Commission amounts to a confiscation
of properry without due process of law and
(5) that the First Na t ional Bank of
Alamogordo would be prohibited by federal
tribution Company, in the course of an in;
vestigation into its rates by the Commis;
sian, had included water rights valued at
mission. However, by remanding this
case, we would be endorsing a gam~
$732,000 in its rate base based on a valuation of $1,000 per acre foot. The water
company based this value on an appraisa l in
fails-a utility company could then re,
tum to the Commission and provide
responsible evidence. This we will nO[
by an attorney
do. Silver Lake has had sufficient op-
proximately $2.3 million wasCIAC because
estimating the value of a $1 ,(x)() an acre foot
portunity to demonstrate its costs in
developing the water rights. S ilver
Lake's "all or nothing" proposition has
left the Commission, the district court
and this court with no choice but to
conclude that the "original cost" of its
of testimony in an earlier ratemaking pro~
ceeding. The Court rejected the Trustee's
preemption argument after a rev iew of fed~
the form of a letter sent
for the water rights. This figure was placed
on the books of Silver Lake. The only cost
evidence placed before the Commission was
$25.00 each for three pennits paid by the
developer. Also, the water company placed
in evidence a stipulation of the lnterna l
Revenue Service as to the value of the water
rights in the Estate of W illiam Lear, the
developer who fOlU1ded the water company.
bling mentality where-if the gamble
water rights is $75.00.
The Supreme Court held that there was
no basis for reversing the Commission's de,
cision on the valuat ion.
A lthough there were undoubtedly other
water right development costs, such as well
drilling, engineering, legal and other expen,
dituTes, the water compa ny submitted no
such costs to the Commission, in spite of
being given a two month continuance to
submit documentation of such costs.
The Supreme Court approved the deci~
sion of the Public Service Commission in
using the original cost of $75.00 for rate
base, instead of the $732,000 submitted by
the water company. The Supreme Court
said that the Commission had broad discretion in valuing utility assets and was not
required to use any particu lar valuation
method.
New Mexico Supreme Court
Upholds Commission's
Determination of Contributions
in Aid of Construction and Rejects
Appeal of Trustee in Bankruptcy on
law from operating the water company if it
bids its interest in the water company at a
foreclosure sale.
The Court derermined that the Commission was correct in determining that ap-
eral bankruptcy law:
... we believe that Congress in no way
intended to preempt the ratemak ing
proceedings of this case, or the widely
accepted C IAC doctrine used as part
of the calcu lation of a fair rate of re~
tum. ill fact, we believe that Congress
specifically provided for this sort of
standard ratemaking proceeding in
§362(b)(4)-(5), which excepts policy
and regulatory proceedings from the
automatic stay.
Bankruptcy and Rate Issues
On August 5, 1992, the New Mexico
135 PUR4th at 181. The Court further re-
Supreme Court issued a decision in the case
jected the Trustee's argu ment that as a bona
of Daniel J. Behles v. New Mexico Public
Service Commission, 135 PUR4th 176. This
appeal was by the Trustee in Bankruptcy of
the Timberon Water Co. appealing the fi -
fide purchaser h e could void the
nal order of the New Mexico Public Service
Commission denying the Tmstee's requested
rate increase for the water company. The
Commission's C IAC designation pursuant
to §544 of the Bankruptcy Code. The Court
stated that the Trustee c ited no precedent
for such a novel propos ition and that this
proposal was U a stretch of common sense
(continued on next page)
WINTER 1992
51
)
Regulatory Decisions , continued
and reason." The Court detennined that
the rates set by the Commissio n were within
the zone of reasonableness and therefore
not confiscatory. The Commission had the
right to exclude CIAC from rate base and
the Commission also could not set rates
designed to raise capital for deferred main;
tenance. The Commission's function is to
set prospective rates only. In regard to the
appeal of the T rusree concerning the First
National Bank of Alamagordo, the Court
determined that a decision on this issue
would be an advisory opin ion and that the
Court does not give advisory opinions.
Illinois Appellate Court Affirms Trial
Court Ruling that Municipal Public
Health Ordinances Were Preempted by
the lllinois Public Utilities Act
On July 24, 1992, in the case entitled
Village of 13oUngbrook v. Citizens Utilities Co.
ofIUinais, 231lll. App. 3d 740; 597 N.E.2d
246; 1992 Ill. App. LEXIS 1195 ; 173 Ill.
Dec. 538, the Appellate Court of Illinois,
Third District, upheld the trial court ruling
which dismissed complaints when it found
the Village's public health ordinances were
preempted by the Illinois Public Utilities
Act. Citizens is a public utility which pro~
vides water and sewer service to the Village.
Citizens is alleged to have discharged
untreated sewage from its plant onto prop~
erty located in the Village. The Village filed
complaints against Citizens for violating mu~
nicipal o rdinances. Citizens moved to dis~
miss all complaints on the basis the Public
Utilities Act preempted the Village from
enforcing its public health ordinances. The
trial court agreed and granted the motion to
dismiss. The court detennined that the Leg~
islature had conferred upon the Illinois Cnmmerce Commission the power and author~
ity to comprehens ively regulate all public
utilities within the state and that the gen~
eral regulation of public utilities by the Illinois Commerce Commission has been since
1913 a matter of statewide, not local, con~
cern. The Court detennined that the Public
Utilities Act grants to the Illinois Cnmmerce Commission regulatolY authority over
Citizens' operations of its sewage service
and preempts such regulation by the V illage. The Court noted that its holding in no
way precludes local municipal regulation
over public utility matters which do not
interfere with or overlap the regulatory
52
NAWCWATER
authority of the Illinois Commerce Com~
mission.
Justice Barry dissented stating that he
found nothing in the Public Utilities Act
expressing a legislative intent to preempt
the local ordinances at issue which were
enacted pursuant to the Village's police
power in the interest of public health. In his
dissenting opinion he reviewed the Public
Utilities Act and reasoned that the act gave
the Illinois Commerce Commission com~
prehensive regulatory control of the busi~
ness aspects of public utilities. He was of the
opinion that the ordinances were a reason~
able exercise of the home rule municipality's
police power for the protection of public
health, which did not impede or overlap the
Commission's regulation of the business as~
peets of the defendant's services.
revenues for a customer at a new site
wou ld be 20 percent of the cost of
such new facilities.
4. Conservation audits to le velize de~
mands and reduce water usage and
corresponding meter size, and rec~
ommendati ons o n appropriate con ~
servatio n equipment at no charge.
5. Flexible decision making, on a
project~by~project basis, tmder ob~
jective and non~discriminatory cri~
teria, to determine whether the u til ~
ity or the c ustomer shou ld pay the
income tax on Contributions in Aid
of Construction ("CIAC"), wh ich
may add approx imate ly 60 percent
to the cost of new extensions and
adversely affects economic de velop~
ment.
Connecticut Department of Public
Utility Control Approves Long Term
Economic Development Rate Proposals
On April 16, 1992, the Connecticut Department of Public Utility Control approved
economic development rate proposals put
forth by regulated utilities, including water
utilities, as part of a decision in a reopening
of their last rate cases. 111is decision in Re
Connecticut Natural Gas Corporation, 132
PUR4th 277, approved deferred accounting
treatment for expenditures in support of
economic development programs and ap~
proved certain rate proposa ls. The water
utilities (Bridgeport H ydraulic Company,
Connecticut~Amcrican Water Company
and tl,e Cnnnecticut Water Company) filed
a consolidated plan for economic develop~
ment rates and terms and conditions that
allow each company to negotiate additional
inducements depending on the circum~
stances of the prospect and the water com~
pany involved:
The proposed economic develop~
ment meas ures submitted by the
Water Utilities include offering a
20% reduction to the tail block volumetric rate , a 25% reduc ti on to pri~
vate fire service tates and reducing
the level of guaranteed annua l rev~
enues required under guaranteed
main extensions contracts to 20%.
The volumetric and private fire rates
would gradually increase, reach ing
parity with the rates for the remain~
ing customer base, over ten years.
The proposed economic development
measures include the following:
1. A volumetric rate equal to 80 percent
of the tail block rate. This rate would
increase over the ten year contract
period to achieve equalization with
the tail block rate.
2. Private Fire Protection Service priced
at a discount from current rates. This
rate would be gradually increased to
reach parity with existing fire rates at
the end of ten years.
3. A reduced G uarantee Contract Rate,
whereby the level ofguaranteed annual
132 PUR4th 277, 286. The program is a
coordinated program with the Connecti~
cut Department of Econom ic Develop~
me nt . Although ex penses are being
deferred until the next rate case, the
Depart ment of Public Utility Control retains the right to review any pre~approved
program or project and the amoun t of
rate recovery will be determined in each
utility's general rate case . The rate pro~
posals and economic development pro~
posals are intended to benefit the public
by increasing jobs and capital investment
in the state, while also benefit ing utility
rate payers by expanding the customer
base.
Missouri Commission Approves
Surcharge to Pay Carrying Costs of
Bond Issue for Construction Program
O n September 8, 1992, the Public Service Commission of the State of Missouri
issued a decision in the case of In the
Matter of the Raytown Water Company's
=
tariffs to provide a permanent increase in
rares for water service, Case No.
WR~92~
85. O ne of the issues was whether or not
an interim surcharge should be made per~
manent and, if so, on what terms and
conditions. The company had determined
that it needed $3 million for the construc tion of additional storage and water
line replacement, and it did not have
sufficient cash fl ow to borrow the $3 million. The company had previously received permission from the Commission
to issue $3 millio n of tax exempt water
facility revenue bonds under a program of
the Missouri Environmental Improvement
and Energy Resources Authority
("EIERA"). The Commission had approved interim tariffs to produce annua l
gross revenues of $425 ,000 in order to
pay the carryin g charges on a temporary
basis. In discussing its approval of the
surcharge on a permanent basis, it noted
that normally one of three methods is
used for compensating a utility for its capi~
tal costs or carrying costs incurred during
the cost of construction. These include
an adjustment in the overall rate of re~
tum, the inclusion of construction work
in progress ("CWIP") in the rate base and
the allowance for funds used during co n~
struction ("AFUDC"). A ll three of these
traditional methods were rej ected and the
temporary surcharge was made permanent
and the surcharge funds are to be placed
in an escrow account and the design of
the surcharge is to "zero out" the cash
flows of th e surcharge fo r the period of
time when construction takes place. The
Commission determined that the mecha~
nism it established afforded the fairest
and most reasonable treatment for the
ratepayer of the company.
In providing the money for the carry~
ing costs, the ratepayer is not getting
the benefit of any present use of the
new construction. What the ratepayer
does get is the surcharge clearly designated as carrying costs and eliminated
from future rate base so that future
rates do not include double payment
by the ratepayer. A lso, the ratepayer,
due to the surcharge being escrowed
and the EIERA funding, benefits from
a lower debt service coverage requirc~
ment and lower costs of capital that in
effect allow fo r the lowest possible
nonsurcharge rates.
The order also provides that any difference
between the total carrying charge (income
expense, letter of credit fee and income
taxes applicable to the surcharge) and the
amount collected by the company under
the surcharge, will be treated as a contribu~
tion in aid of construction ("CIAC"). This
ClAC treatment is allowed because any such
payments are truly contributions that would
be in addition to the amou nts necessary for
carrying charges. In concept, such amOlmts
could either be refunded or used by the
company for payment of principal or new
construction and as such would be true con~
tributions in aid of construction.
Washington Commission Denies
Application for Authority to
Issue Securities and Implement
a Surcharge in Order to Fund
System Upgrades and Improvements
Because of Inadequate and Insufficient
Water Service to Customers
O n April 10, 1992, the Washington Utilities and Transportation Commission issued
a decision in the case ofWashingron UTe v.
Alderton-McMillin Water Supply, Inc., 133
PUR4th 46. The Commission denied an
application for authority to issue securities
and implement a surcharge in order to fund
system upgrades and improvements. The
Commission found that the company had
been providing inadequate and insufficient
water service to its customers for a number
of years. N umerous complaints had been
made to the company, but it had been largely
inaccessible and unresponsive to its cus~
tomers and not taking reasonable and ad~
equate steps to remedy any of the multitude
of problems with the system. At a public
hearing on the proposal, ratepayers appeared
and vigorously objected to the water utility's
proposals. The Commission fOlmd that a
surcharge in the face of the company's disre~
gard of ratepayer interest is not appropriate.
The company had taken an ineffective piece~
meal approach to planning which had resulted in its customers paying for an interim
plan which has not been implemented in
any respect and was already ohsolete. Although the utility is in desperate need of
facility upgrades, it could show no specific
plan and such lack of commi tment com·
bined with a very poor quality of service and
inferior responses to customer complaints,
justified disapproval of the appli cation. The
Commission wac; unconvinced that the sur~
charge wou ld lead to necessary improve~
ments in water quality and system opera~
tions. The company had not met its burden
of demonstrating that the surcharge was just
and reasonable.
Indiana Commission Grants
Indiana Cities Water
Corporation Full Recovery
of Federal Income Tax Expense
In Indiana Cities Water Corporati on's
previous rate case, the Indiana Utility Regu~
latory Commission had disallowed the recovery of current federal income tax ex~
pense because Indiana C ities participated in
a consolidated tax return with non~utility
affiliates with tax loss carryforwards which
offSet Indiana C ities' tax liability. The Commission contended that Indiana law prohib~
ited the recovery of income taxes unless
actually and currently remitted in cash. This
issue is presently on appeal before the indiana Court of Appeals.
Meanwhile, Indiana Cities commenced
filing a separate tax return. The filing of a
separate return was required because a newly~
created direct parent company of Indiana
Cities sold voting preferred stock to a non~
affiliated person. Under the Internal Revenue Code, a corporation may not join in a
consolidated return unless 80% of the total
voting power of the corporation's stock is
held by an includable corporation. The Office of the Utility Consumer Counselor (the
"QUCC") contended that Indiana C ities
should continue to be treated as if it were in
the consolidated return because the trans~
action had not been approved by the Commission. The OUCC argued that the crcation of the new parent company consti ~
ruted a transfer of the "franchise, works or
system" of lndiana Cities, an event requir~
ing Commission approvaltmder Indiana law.
The OUCC also alleged the new parent
company was a "sham" which should be
disregarded.
OnJuly 8, 1992, the Commission in Cause
N o. 39166 rej ected the OUCC's position
and held that Indiana Cities was entitled to
recover the federal income tax expense as~
sodated with its own stand~a lone taxable
income. The Commission found that dlere
was a legitimate reason for removing lndi ~
ana Cities from the consolidated return be~
cause use of the tax loss carryforwards to
offset the positive tax liability of Indiana
Cities depleted the assets of the non~ utility
affi liates and, in effect, required the affi liates
(continued on next page)
WINTER 1992
53
Regulatory Decisions, continued
re~
The Board in rejecting the Initial deci-
su ited in a high bill rather than actual
sion of the Administrative Law Judge found
that there was no precedent on this issue. It
stated that it cou ld be argued that a remote
reading device is a convenience to both the
utility and the customers by eliminating the
company's defective equipment had
to sa tisfy Indiana Cities' tax liabili ty. Fur~
thermore, Indiana C ities needed the rev~
en lie stream associated with federal in~
come tax expense to ma intain its pre ~tax
interest coverage at a level necessary to
attract capital.
In interpret ing for the first ti me a re~
consumption. The water company's posi~
tion was that it was seek ing th e entire bill
cent Court of Appeals decision holding
ence could not reso lve the dispute, the
case was referred to the Office of Admin~
istrative Law after the customer filed a
forma l petition. The principal issue be~
fore the Administrative Law Judge was
whether or not the remote register was
considered a part of the meter since the
that the Commission had jurisdiction to
review the format ion of utility holding
companies, the Commission concluded
that the Court decision did not mean
that a holding company formed without
Commission approva l was a legal nullity
or that a ho lding company was a "public
utility" unde r Indiana law.
In any event, the Commission found that
Indiana law prohibited the Commission from
ignoring income taxes actually paid by Indiana Cities and from basing tax expense for
ratemaking purposes on hypothetical cor~
porate structures or tax returns. The Com~
mission concluded that it was not reason~
able to hypothesize that Indiana C ities par~
ticipates in a consolidated tax return simply
because it once did.
New Jersey Board of Regulatory
Commissionel's Determines
that Remote Register is not a
Part of the Meter for the
Purposes of Adjustment of Charges
In an Order Rejec ting Initial Decision
dated April 23, 1992, BRC Docket No.
WC9 101 008 1U, OA L Docket No.
PUC3457-9 1, the New Jersey Board of
Regu latory Commiss ioners determined
that a remote reg ister which malfunc~
tioned was not a part of the meter for the
purposes of adjustment of charges; how~
ever, the Board did not require the bal~
ance to be paid because of the billing
procedures used in this specific case,
George E. Magley v. New Jersey American
Wa ter Company. The custo mer asserted
that the bill of $2,076.53 was too high in
compa rison to prio r bills he had received
at the premises. The water company main~
tained that the amount in question was
the result of a malfunctioned remote reg~
ister and reflected an adjustment for pre~
viously unbilled consumption for the prior
four year period. When the bill was questioned, the water company reduced the
amount, but the customer refused to pay
the reduced amount maintaining that the
54
NAWCWATER
and that the credit of $ 1,505.68 which
reduced the bill to $570.85 was only for
the purposes of settlement and negoti a~
tio n. Since the customer disagreed with
the adjusted bill and an informal confer-
adjustment of charges rules, N.J.A.C.
14:3-4.7(c) provides tha t:
necessity of estimated bills. The Board found
that since the meter would still function
and register usage if the remote is removed,
that the remote dev ice should not be con~
sidered an integral part of the meter. "This
evidences that a remote register is a conve~
nience designed to eliminate estimated bills.))
Re Middlesex Water Co., Docket No. 7411847 (june 19, 1975).
The Board determined that the offer of
$ 1,505.68 was a credit adjustment rather
than a settlement offer which left a remain~
ing bill of$570.85. The determination that
No adjustment shall be made for a
meter that is found to be registering
less than 100 percent except in the
case of meter tampering, n o n~regis~
tering meters or in circumstances in
which the customer should reason~
the remote register was not part of the meter
under the rule would allow for the collection of the remaining amountj however, the
Board cou ld not determine if the amount of
$570.85 was an accurate amount for water
consumption and therefore directed the wa~
ably have known that his bill did not
ter company to credit the $570.85 to the
reflect his usage.
customees account.
In th is instance, the exceptions did not ap~
ply. Therefore, if the remote register was
found to be a part of the meter, no adjust~
ment could be made of the customer's bill
based upon the fact that the remote register
had been malfunctioning for over a four
year period, even though the water meter
of Regu latory Commissioners iss ued a
decis ion and order allowing the Vernon
itself, when tested, fell within the prescribed
Valley Water Company to discontinue fire
requirements of accuracy. The Administra~
tive Law Judge defined a meter as "an in~
strument for measuring and usually for re~
cord ing automatically, the quantity mea~
hydrant service to a condominium develop~
ment in its franchise area because the con~
sured." quoting 57 C .].S., Meter at 1075
(1 948) . The Administrative Law Judge reasoned that from this definition it could be
inferred that the measuring instrument not
only includes the internal components but
also includes the dev ice for registering or
record ing the amount or quantity. He rea~
soned further that if the face, dial or register
of a meter are integral parts of the meter, the
reliance upon the remote device to measure
consumption includes it within the defini~
tion of a meter and makes the remote an
integral part of the meter. The Administra~
tive Law Judge concluded since the remote
was part of the metcrI that no adj ustment
could be made and that, therefore, the bills
rendered by the water company should be
withdrawn.
New Jersey Board of Regulatory
Commissioners Allows Termination
of Fire Hydrant Service to
Condominium Development
On May 7, 1992, the New Jersey Board
dominium development had failed to pay
the tariff charges. In the Matter of Vernon
Valley Water Company v. Stonehill l'rope1·ty
Owners Association-Discontinuance ofFil~ Hydrant Service, BRC Docket No.
WC92010003U. T1,is decision was issued
over the objections of the homeowners as~
sociation which claimed it was not respon~
sible for past fire protection charges, and
that the Township of Vernon was the proper
customer for the fire protection service. In
the alternative, the homeowners associa~
tion proposed that the water company should
bill the individual condominium owners.
The Board held that the Vernon Valley
Water Company was entitled to discon~
tinue fire protection service unless the asso~
ciation paid the past due charges or entered
into an appropriate deferred payment plan.
The Board noted that the homeowners
•
associat ion had been involved in appealing
a prior Board decision which, among other
things , approved initial rates and in that
appea l, the ho meowners association had
never challenged the fire protection tariff.
The Board agreed that the estab lishment of
the ta riff rate did not necessarily obligate
the homeowners association to contract for
or accept fire protection service. However,
the Board held that in this case, the associa~
don was responsible for past charges on a
quas i contract basis. The association had
received the benefits of the fire protection
service and had never challenged the rate in
the prior proceeding. The ho meowners as~
sod ation said it had never <Ctouched the
hydrantsj" however, the Board held that the
association rece ived the benefit from fire
insurance savings.
The homeowne rs assoc iation argued
that the township was the appropriate
customer fo r fire protection service; how~
ever, th e township has refused to pay and
the Board held that there was no legal
requirement for the township to provide
and pay for fire hydrant servi ce. In this
factual s ituat ion, there was no basis for
holding the township liable on a quas i
contract basis. The provision of fire pro~
tcction service by a municipality is per~
miss ive and no t mandatory.
The homeowners association also ar~
gued that, in the alternative, if the town ~
ship was not the appropriate customer,
then the ind ividual condominium own ~
ers should be billed. However, the Board
refused to accept this proposa l stating that
if indiv idual ho meowners refused to pay,
it would be imposs ible to terminate the
fire protection service. Since the notice
of discontinuance had already been served,
the Board held the re was no need to give
a new notice.
In subsequent decisions rendered in Au~
gust 3, 1992, the Board denied a motion
for reconsiderat io n of the notification re~
quireme nt and denied a motion for stay
holding that there was no irreparable harm
and that if the homeowners associatio n
won on appeal , there would be a rate
adjustment or refund.
The ho meowners associat io n has taken
an appeal to the Appellate Division of
the Superior Court. T he Appellate Division has granted the association's motio n
for a stay of the Board's decis ion provided
that the association posts a supersedeas
bond.
New Jersey Board of Regulatory
provided that this did not result in a
manifest injustice or interfere with a
vested right since was determined that
it was the intent of the rule to have this
retrospective applicat ion. The Board
stated it was clear from the new PAWC
rules that the intent is to include all
deferred purchased water costs. The new
rules provide a definitio n for deferred
accOLU1ting treatment. The Board held
that there was no manifest injustice in
giv ing the ru le th is retroactive applica;
tion, and that ratepayers have no vested
Commissioners Issues Written Order
Approving First Increase Under
Purchased Water Adjustment Clause
and Dismissing Arguments of the
Division of Rate Counsel
The increase granted to Shorelands Wa~
ter Company for increased purchased water
costs onJuly 8, 1992, was reported. OnJuly
30, 1992, the Board of Regulatory Commissioners issued the written order approv ing
this increase which order detailed its dis;
missal of the arguments of the Divisio n of
Rate Counsel as follows:
1. Rate Counsel had argued that the company had failed to file within 30 days
3.
Board's order approving the water
company's deferred accounting did no t
after notification of the increased
charges by the water purveyor as re~
quired in the new Purchased Water
note the possibility of PWAC rules,
but stated that Rate Counsel lVould
have an opportunity to fully test the
Adjustment Clause ("PWAC') rules.
The Board held that since the rules had
increase costs in the context of a full
not been adopted during that time pe~
rioel, it was impossible for the company
base rate proceeding. The Board held
that the intent of the new PAWC rules
make its filing within the 30 days
notice period. The Board noted that
is to provide timely recovery of increased
purchased water costs and modified the
deferred accounting o rder to allow re~
to
the water company had made its filing
within two weeks of the effective date
of the new ru les. The Board held that,
given the intent of the Board's PWAC
4.
rules to provide for timely recovery of
increased purchased water costs, it
would be inequitable to refuse to can;
sider the effect of the increase in pur~
chased water charges until there is an~
other increase by the water purveyor or
the Board waived the 30 day notice
covcry of the 1991 deferred costs using
the new PW AC ru les.
Rate COlmsel argued that to allow these
costs would be retroactive ratemaking.
The Board disagreed and held that the
use of an adjustment clause on an interim basis when tied to a base rate
proceeding where there is a proper vali;
dation of the costs incurred is not impermissible retroactive rdtemaking.
until after the filing for additional rate
relief in a ful l base rate case. Therefore,
2.
right which is violated by the order.
Rate Counsel also stated that the
5.
Rate Counsel also argued that the Board
should use more recent consumption
requirement of the rules.
data fi-om 1991, rather than the base
Rate Counsel objected to the granting
of relief under the PW AC rules for the
consumption data as defined in the
deferred cost incurred prior to the adop~
tion of the PW AC rules. The water
company had previously requested de~
ferred accounting treatment and the
Board had approved this request for
certain costs incurred between March
1, 1991 and November 7, 1991. The
Board stated that the water company
had met the other requirements of the
PW AC rules; that is, there was a base
rate case within the previous three year
period and its purchased water costs
exceeded 10% of its total operating and
maintenance budget. While rules are
generally applied prospectively, the
Board stated that it was clear that the
rules may be applied retrospectively,
PW AC rules (in this case, last base rate
consumption). The Board held that the
defmition of consumption set forth in
the rules would govern .
California Public Utilities Commission
Directs Southern California Gas
Company to Reopen 12 Branch Offices
Previously Closed Witbout
Commission Approval
In a decision which will have an effect o n
watercompanies 1 theCalifomia Public Utili;
ties Commission on August 1J, 1992, in a
case entitled Corona City Council et at. v.
Southern California Gas Co., D. 92-08-038,
Case No. 91-05-042,1992 Cal. PUC LEXIS
563, the California Public Utilities Com(continued on next page)
WINTER 1992
55
,
case where it said:
Regulatory Decisions, continued
mission determined that SoCalGas' d o;
su re of 12 bnm ch o ffi ces w ith inadequa te
no t ice a nd with o ut reasonab le altern ative services in place was unjust an d unreason able and a clear vio lat ion of Pu blic
Utilities Code *451. Al though SoCalGas
had argued that it co uld not find a single
case whe re the C o mm ission had defined
the utili ty's respon sib ili ty to prov ide payment offi ces, th e Commission listed precedents for the determination of location
and services of public ut ili ty compan y
fi ces and quoted from a 1977 telephone
or
I n sh ort , as we said in D.88232, the
utility "should n ot be the sole an d
final arb iter of wh ere and wh en pu blic paymen t agencies arc to be established."
A pp. of PT& T Co. 1977; 83 C PUC 149,
244-245. In rev iewing rhe co mpany's basis fo r its dec isio n for c losing the 12 branch
offices, the Commiss io n de termined tha t
its formula was neither an accurate nor
an obj ecti ve basis for making decisions
abo ut bra nch offices. The formula was
simply a mathematical expression of a
predeterm ined policy decision to close a ll
branch offi ces in smaller rural communi ~
tics. The Commission also found that th e
impac t of the office closures fell dispro,
portionatcly upon poor, e lderly and mi ~
nority custo mers. The co mpany was or . .
dered to reopen the 12 branch offices in
the sam e location , or, if not in th e sa me
location , in a location whi ch is at leas t as
conven ien t and accessible as the office
which was closed. The company was also
directed to report on the offi ce reopenings,
as well as provide more de ta iled informa,
tion concerning the office closures. ,
Customer Service Report
Electronic Debiting: The Automatic Payment Plan
by Richard j. Johnson and Rebecca Nilsen
Rio Rancho Utilities Corporation
Mary C ustomer loves being a snow bird
and takes of( every winter fo r warmer cli~
mates. Far~sighted Freddie can't see well
enough to read his bill and hates to wri te
checks. Absent-minded Ma tilda would pay
her bill on time every month if I would just
call her up and remind her. Frugal George
doesn 't want to pay the post office $.29 to
mail his payment and doesn 't want to pay a
day sooner than the due date. What do.
these typical custo mers in Rio Rancho, New
Mex ico have in commo n ?They have signed
up for automatic bank clmfts and don 't have
a worry in the world.
That's right! Rio Rancho U tilities Corporation hac; listened to its customers and
responded with an automatic payment plan.
The auto matic payment plan allows a
customer's checking or sa vings aCCQlmt to
be debited automatically each month on
the due date. In this modem world where
the customer wants to max iInize bank float,
pinch pennies, and have a hassle,free method
of payment, RRUC makes it as easy as fill . .
ing out one short form. As far as the cus,
tomer is concerned, he has the best of all
worlds in that he still receives a bill but does
not have to make any effort to pay it. If
56
NA WC WATER
there is a question , or (probably impossible)
a mistake on the bill, he just calls customer
service and we take care of the "problem"
before his account is debited. 111e customers who use this service are thrilled with the
con venience and we at RRUC are proud to
offer the service.
One of the first questions usually asked
by company personnel is how much of a
hassle is this? With a big grin we can answer
that this service is a win . . win,win situation .
The customer obviously wins because he
likes the service. The employees handling
the Automated Clearing HOllse (AC H)
transaction likes it because they have on . .
line control of that account. The company
likes it because it is cheaper than lock,box,
cash flow is excellent from these customers,
and chances for errors are minimized. There
were initial computer and development costs
but our happy customers have already made
up for that.
C urrently, RRUC has about 400 customers on this new service and is adding CllS'"
ta mers daily. We expect to eventually have
about seven to eight hundred of our cus. .
tomers, or between seven and eight percent
of our total customers on . . line. The cost to
the company is about seven cents per trans,
action , or about three cen ts cheaper then a
lock,box customer. Also, take into consid ~
eration the fact that these customers are
never late and no urgent notices will ever be
sent to them. W e also think that these
customers hardly ever allow the ir bank ac~
counts to have insuffkient fu nds.
The process for se tting a customer up
on this system is very simple . The c us'"
tomer comple tes an au thori zation form
either in the office or by mail. The fo rm
includes the customer's name, address,
bank transit number, bank account nllln . .
ber, name of financial institution, type of
account, and customer's water acco un t
number. The customer must then sign
and date the form.
The information taken from this form
is entered into the local co mputer sys tem.
This is accomplished by selecting t he
ACH Processing option o n the ma in
menu. This informati on is then transm it . .
ted to the mainframe system during th e
normal e nd of day procedure. When th is
information is updated it is transmitted
back to the local compan y's system. At
this time the custome r is given a pre,
authorization status code depend ing on
the type of account being drafted.
A ll data is updated on the ACH master
file and transmitted to the hank on a
weekly basis. You can enter your informa~
tion all during the week but it is only
transm itted once a week to the bank. The
bank will send this informat ion to th e
clearing hOllse and verifies the informa~
tion for each customer. A report is sent to
the local company if, for any reason , a n
account is rejected. The turn around for
th is information is approximately two
weeks.
After the two week period, if the hank
has not rejected the customer's a uthoriza~
tion, the local company updates the
customer's account. This update is called
pre~note approval from the bank. This is
prepared in the same manner as the pre~
authorization batch. The customers are now
authorized to have their next bill drafted
from their checking or savings account.
W hen the account is billed the bill ing register will signify the ACH customer. The
local company's computer wiU show an ACH
payment line above the payment amount. If
th e customer is on bank draft, there will be a
yes on this line, if the customer is not on
bank draft there will be a no on this line.
Th is file will be sent to the bank at least
two days prior to the due date. The money
will not be drafted from the customers ac;
count lUltil the due date. The customer wil!
receive a bill as normal, except that the re
will be a message noting that the bill will be
drafted and not to pay it. If the amount of
the bill being drafted needs to be changed
for any reason such as a high bi ll, the cus;
tomer already paid the bill, or for a canceled
bank draft, the payment amount can be
changed before the information is sent to
the bank. There are also provisions made in
case an amount needs to be changed afte r
the file is transmitted to the bank.
A special ACH cash batch is created and
entered into the mainframe system on each
due da te. A report is produced to show the
beginning balance, rhe batch total, and the
closing balance. The day after the transmis~
sion to the bank, the bank will veri fy the
money amount transmitted and how many
customers are on the file. The daily bank
draft amOlUlt is shown as a sepamtc line
item on the daily cash report and the daily
transmittal report. It is very important to
keep a control between the local company
and the bank. Any items rejected by the
bank, for insufficient funds or a closed ac;
count, and returned not paid to the local
company arc handled the same way as a
returned check.
C hanges to a customer's ACH account
can be made through the ACH customer
file. A customer can change their bank,
account number or accoun t type. This type
of change however requires a new pre~au;
thorization to the bank.
Once a customer is on th.e service, the
bill carries a message not to pay it as it will
be automatically deducted from the speci~
fied account. Call Rick Johnson or Becky
Nilsen in Rio Rancho (505/891-1200) if
you want to find out more about our new
service to the customer. .t
Who Is Customer Service?
by Clyde V. Webb
Baton Rouge Water Works Co.
Those of LIS in Customer Service should
think about the following story:
In the days when an ice cream sun;
dae cost much less, a ten~year old boy
entered a hotel coffee shop and sat at a
table. A waitress put a glass of water in
front of him.
"How much is an ice cream sundae r'
"Fifty cents," replied the waitress.
The little boy pulled his hand out of
his pocket and studied a number of
coins in it. "How much is a dish of
plain ice cream ?1I he inquired.
Some people were now waiting for a
table and the waitress was a bit impa;
tient. "Thirty;five cents/' she said
brusquely.
The little boy aga in counted the
coins. "I'll have the plain ice cream,1I
he said.
The waitress brought the ice cream,
put the bill on the table, and walked
away. The boy finished the ice cream,
paid the cashier, and departed. When
the waitress came back, she picked lip
the empry plate and then swallowed
hard at what she saw. There, placed
neatly beside the empty dish, were two
nickels and five pennies- her tip.
How does this compare to the customer
that slows down our cashier line because it
takes time to write a check, or COlUlt out the
last coins in their pocket or change purse?
Another situation may be the customer
whose paying habit is not real good and
gives the customer service representative a
difficult time. What about the person on
the telephone that just does not lU1derstand
anyth ing? How aoout the customer that
states, "M y meter is never read."
These situations and many others consti;
tute the primary rea'iOn for our existence,
without which Customer Service would not
be necessary) placing us in the list of unem;
played. Instead of addressing these situations as "PROBLEMS," we should view these
as "OPPORTUNITIES OF SERVICE,"
opportunities to show how professional
Customer Service can be.
Developing skills to produce professional
Customer Service personnel is a never end;
ing process. Situations, available equipment,
programs and people change. causing meth;
ods to chan ge. The C ustomer Service COIll;
mittee continues to develop programs for
the annual C ustomer Service Conferences
that will be rewarding and informative. The
Committee welcomes any feedback that can
cause our conferences to be better. The 1993
WestelTI C ustomer Service Conference will
be held March 23-24 in Redondo Beach,
Califonlia and the Eastem/Midwcstem Con;
ference will be at the Warwick Hotel in
Philadelphia, Pennsylvania, May 3-5.
Make plam to attend one ofour conferences
if at all possible. The more participation we
have, the better 01lZ programs will be.
When the next customer contacts you,
thi nk about the ten-year old boy, his tip and
the waitress, before giving your response.
Who is C usto mer Service? EVERY
EMPLOYEE!! •
W INTER 1992
57
Quorum Call
by james L. Coao
The Clinton Presidency: What it Will Mean
for Investor..Owned Water Utilities
The numbers are in for all to see, On
Tuesday, November 3, 1992, William
Jefferson Clinton, Governor of Arkansas,
was elected the 42nd President of the United
States. C linton garnered 43 percent of the
vote, 32 states and 370 electoral Yotes. Sena~
tor Al Gore of Tennessee is the Vice Presi~
dent··deer. For the first time in 12 years,
both branch es of the government are con~
trolled by the same party.
Meanwhile, across town on Capitol
Hill , the H ouse of Representatives will
h ave 110 new membe rs jo ining it for the
l03rd Congress when it convenes in Janu;
ary. A lthough th is is the larges t fres hman
class since 1948, it is smaller th an the 150
seat cha nge predicted by many. While
the co mplexi on of t h e House wi ll
change-with 46 women, 38 blacks, 16
Hispanics and five Asian~Americans­
the party composit io n remains virtually
unchanged with the Republicans pickingiup n ine seats.
The Senate will have 11 n ew members,
including four n ew women bringing the
tota l to an all time high of six. If Sen ator
Wyche Fowler (D-GA) wins his run-off
election on November 24 , the Democrats
will pick-up one scat in the Senate. O therwise, the ratio of De mocrats to Republicans will remain unchanged at 57 to 43.
"The economy, stupid"
What does this jumble of numbers mean
for the industry? Not much at first. James
Carville, a leading political advisor to
President-elect Clin mn, h ad a sign on h is
desk read ing "The economy, stupid ." That
was the centerp iece of th e Clin ton ca mpaign and will be the centerpiece of his
early initiatives.
58
NAWCWATER
Im med iately upon his inauguration and
for th e first lOa days thereafter (or until
abou t the end ofJ ul yL his ad ministration
will focus on the eco nomy, h ealth care
reform and little else. C li nton has already
been at work on these initiatives. For the
last month or so, C li n ton h as been consulting with key Congression al leaders on
a weekly basis to discuss his proposals and
ways to move them qu ickly. C lin ton 's
success at moving a jobs an d health care
package will determine the ultimate suc~
cess of his administration.
In a book entitled Putting People First
(PPF), Clinton and Go re outline their
agenda. In addition, Senator Gore in h is
book, Earth In The Balance (EITB), provides his description of and prescription
for th e wo rld 's environme ntal challenges.
Together, these works provide a clear pic~
ture of the issues the C lin ton administra~
tion will address.
As part of this plan to "Put A merica to
Work," Clinton h as several ideas orga~
nized under the rubr ic "Rebuild A merica."
Two of these are relevant to the industry.
First, he wants to create a Rebuild America
Fund, to provide $20 billion a year over
five years for the repair and con struc tion
of co mmuni cations, transportation and
environmental in frastructu re. It appears
these funds can be used for public/pri vate
partn erships and user fees can be charged
to guarantee the in vestments. He also
wou ld like to promote th e development
of new environm ental technologies fo r
use h ere and as a way to boost exports.
Issues Specific to the Industry
By this time n ext yea r, you will be tired
of reading about the economy and health
care reform. But there are many other
issues described in both Putting People First
and Earth In The Balance that sh ould interest members.
O n the environmenta l fron t, Putting
People First is silent on the Safe Drinking
Water Act. It docs, however, call for th e
enactment of a new Clean Water Act with
standard.s for non~point source pollution and
incentives for the development of methods
to reduce and prevent run~off at its source.
C linton's environmental policy wLll also rely
heavily on market~based incentives that rc~
ward conservation and "green" business prac~
tices while penalizing polluters. He also em~
braces the principle of pollution preven~
tion.
Beyond these broad goals, it is difficult to
predict the impact of a Clinton/Gore administration on water suppliers. Vice Presi~
dent-elect Gore is widely expected to be the
point,man on environmental issues. Such
issues have been a central focus of h is Sen~
ate career. He wi ll have great influence on
the choice of EPA Ad ministrator and Assistant Administrators and a more active
EPA is to be expected.
Gore's book devotes sca nt attention to
th e issue of water quality or the Safe
Drinking Water Act. It states that water
qu ali ty h as gen erally improved, and then
goes on to me nti on lead contaminat ion ,
the cho lera epidemic in Peru, nitrate con~
tamination of groundwater in Iowa and
t he cos t to treat groundwater (but n ot
surface water) contaminated by pesticide
run~off. Like most lawmakers, h e has n ot
devoted much attention to the Safe Dri nk ~
ing Water Act and is an open book on
the issue-both a conce rn and an oppor~
tunity for the industry.
»
•
Again, keep in mind , the early focus of
the C linton administration will be on the
economy and health care reform. Mos t
oth er issues will no t receive se ri o us
consideration until late 1993 or 1994.
Furthermore, C lin to n will not pursue
policies that may jeopardize the economy
o r job c reation. Given the histori c al
tension between environmental protec~
tion and economic performance, some
internal administration conflict over the
direction of env ironm ental policy is not
out of the question .
O ther Issues
Putting People First also lists numerous
other issues which effect the industry. It
calls for a targeted investment tax credit for
small businesses. So far, the details concenl~
ing the parameters of this credit have not
been forthcoming, but it is not inconceiv~
able that many of our member companies
will be eligible for the credit. In the "only
Nixon can go to ChinaJ) vein, a capital
gains reduction for new, long-tenn investments is not out of the question.
You can also expect labor to receive a
war mer embrace from the C linton Admin istration than it has over the past 12
years. Some of the objectives in th is area
include: worker empowermentj increases
in the minimum wage to keep pace with
infla tion j enac tment of the Family and
Medical Leave Acti requi ring employers
to spend 1.5 percen t of payroll fo r worker
training and retrainingj and support fo r a
chemical right-to-know law.
Conclusion: Don't Panic
NA WC members should not pan ic at
the onset of the Clinton Administration.
O n numerous occasions over the past two
years, you have demons trated your ability
to wo rk successfull y with Congress to ac-
complish the industry's objectives. Victories on lead and radon and progress on
the C IAC issue resulted from your willingness to seek common ground with your
legislators rega rdless of party affi liation .
This same attitud e will serve the indust ry
we ll in the years to come.
NAWC "FLY IN"
Please set aside the week of February
22nd fo r a trip to W ashington, D.C. During this week, we wou ld like you to "flyin" to meet with your Senato rs and Representatives concerning issues of importance to the NAWC. We hope to have at
least one representat ive from each member company in each state make this important trip. If you haven 't already, please
call me at (202 ) 833-8383 to inform me
of your ava ilabili t y. Thank you for your
cooperation , I look forwa rd to seei ng YOll
in February!! "
Tax Adviser $$$$$$$$$$$$$$$$$$$$$$$$
IRS Issues New Guidelines
for Deferred Compensation
by Catherine E. Grein
Arthur Anderson & Co., Boston
Defe rred compensation arrangements
have long been used by employers to
achieve a var iety of objectives, such as
employee motivation, tax deferral, and
cash flow management. The usual dilemma that arises in connection wi th
nonqu alified deferred compensation plans
is how to prov ide the employee wi th a
reasonable assurance of future payment
without causing the income to be constructively received and therefore immediately taxable.
Over a period of several years, the socalled "rabbi trust" has evolved as a funding vehicle that, under the right conditions, can result in the designation of
certain assets to be used for the paymen t
of deferred compensation benefits without cu rrent tax to t he employee, Typi-
cally, these trusts permit the contribution
of funds to a trust by an employer with
terms specifying their intended usc and
requ iri.ng that the trust's liability to pay
deferred compensation must be fulfilled
before any funds ca n revert to the employer from the trust. However, it should
be noted that the trust's assets remain
subject to the claims of general cred itors.
Because of the fact that such trust are not
expressly provided for in the Internal Revenue Code or regulat ions, taxpayers have
frequently sought advance determinat ions
from the IRS as to the tax treatmen t of
these funding mechanisms. The result has
been a large number of private letter rulings that are employer-specific based on
stipulated facts, but with many ·common
characteristics.
Since the letter ru ling process can be
time-consuming and expensive, the IRS
has recently issued Revenue Procedure
92-64, wh ich is intended to serve as a
model for rabb i trust arrangements and
presumably streamline the steps involved
in setting up these funding arrangements.
The IRS states that taxpayers who re ly on
the safe harbo r language provided in Re v.
Proc. 92-64 can be assured that the maintenance of a trust veh icle will not ca use
employees to be in constructive receipt of
compensat ion. However, it should be
noted that, if the actua l plan for defe rring
compensation (which is typicall y separate from the trust document) does not
substantively defer the em ployee's access
to th e funds, the use of these safe harbors
(continued on next page)
W INTER 1992
59
Tax Adviser, cominued
for the trust itself will not cure the prob~
lem in the underlying plan.
The model trust language provides that
the trust will be a grantor trust (and therefore taxable to the employer). The trust can
be either revocable or irrevocable from the
outset, or it can convert automatically to
irrevocable status on the occurrence of some
contingency, such as a change in control of
the employer or a decision by the Board of
Directors. Trust principal and income are to
be kept separate from other funds of the
employer and used exclusively for the pur~
poses of plan participants (subject only to
the condition that they can be accessed by
general creditors in the event of an insol~
veney). The trust document can state that
contributions will be made at the discretion
of the employer, or it can make them man~
datory in case of a change in control in
connection with an irrevocable trust. This
Revenue Procedure also provides specific
guidelines as to the responsibilities and pow~
ers of the trustee, as well as the terms gov~
eming the appointment and replacement of
trustees, who must be independent third
parties.
This Procedure states that taxpayers
who previous ly obtained private rulings
concerning rabbi trusts need not modify
them to conform to the model trust terms
unless the existing trusts ha ve been
amended since the receipt of the ruling.
Employers who have modified rabbi trusts
subseq uent to securing rulings, or those
who have established these types of funding arrangements without obtaining rul~
ings, should carefully review the terms of
Rev. Proc. 92-64 to determine whether
to make conforming amendments at this
time. The stated effecti ve date of the Procedure is Jul y 28, 1992, so all such trusts
set up since that date should be reviewed
in light of the model trust provisions.
For employers who have previously con~
sidered the use of this type of trust for
deferred compensation and may ha ve dis~
missed it as too costl y or cumbersome to
set up, the issuance of Rev. Proc. 92-64
may make this a more realistic alternative
to consider.
In a companion release, Revenue Pro~
cedure 92-65, the IRS has outlin ed clarifications to its formal ruling position with
respect to nonqu alified deferred compen~
sation plans, whether or not they operate
in conjunction with a trust funding ar~
rangement. The Service reiterates its offi~
cial policy that the deferral election must
generally be made before the year when
the compensation is earned, but provides
two exceptions in cases of plans that are
newly formed part way through the year,
or in stiruations where employees first
become eligible to participate part way
through the year. The Procedure also defines limited circumstances when a de~
ferred compensation plan may distribute
funds prematurely to deal wi th an Ulln~
foreseeable emergency."
Employers who maintain sta ndard
nonqllalified deferred compensation pro~
grams should consider whether this Pro~
cedure suggests any potential changes to
existing plans. It should be noted that,
while Rev. Proc. 92-65 describes the IRS's
ruling criteria, it may still be possible to
avoid constructive receipt concerns in
some factual situations that do not con~
form in all respects to this set of s tan~
dards. However, any significant variation
from the guidelines set forth by the IRS
should be evaluated to ascertain the de~
gree of potential risk of cu rrent taxation
of employees. ,
Public Relations
Youth Education-Business Goes Back to School
by Lisa P. Oswald
Manager, Public Relations, Bridgeport Hydraulic Company
In 1991, in support of America 2000
national ed uca tio n reform goals, the
National Association of Regulatory
Utility Commissioners adopted a resolu~
tion urging its members to advance
programs to improve education in the ir
communi ties, saying:
"'he safe,y, reliability and efficiency of
our future utility service will depend
heavily on the success of sweeping
fundamental changes in our education
system. "
60
NAWCWATER
Certainly, concern for the future of
o ur nati on's education system is not
peculiar to the utility ind ustry. Nor
ca n we a lo ne solve its problems. Ev~
ery business across Amer ica fa ces the
same challenge- to develop a nation
of wel l ~ed ucat ed citizens, co n sumers
and employees.
So why sh ould we be in the business of education reform? The answer
is obvious, but bears rep ea ting. The re
is a symb iotic relationship between
business and ed ucation. Today's s tu ~
dents will grow up to be o ur emp l oy~
ecs, our custo mers, our contractors.
The y will enter the wo rk force and
staff our industry. And, the y will vote
o n matte rs crucial to the way we do
business.
The reason is more compelling if we
consider the alternative. The cost of doing
no thing is high, and is getting higher, ..
the cost of recruiting candidates, the cost
of training and development, and so on.
It's really quite simple-we can pay now
or we can pay more later.
The ABCs of Going Back To School
Getting involved in your community's
ed ucation system is simple--one step at a
time. W h at you can do runs the gamut, and
more often than not, you r in volvement
doesn't require a large infusion of time or
money. The key ingredient is commitment.
Bridgeport Hydrauli c Company, a $100
million investor~owned water compan y
with 240 employees, took its first step by
making a company, wide commitment to
ed ucation. It's a co mmitment that says
we believe community education is an
important way fo r BHe to achieve its
long~tenn strategic goals. In doing so, it
made education a vis ible part of the
co mpany's day-to-day operations, not simply a feel-good publi c re lat ions program.
The program works because it operates
under these basic tenets:
• Build in an in ce ntive at the topbecause education is identified as a
means of achieving our long~term
corporate goals, there's a mandate
fo r every department to design and
implement an ed ucation program or
support another department's edu~
cation goals.
• Foster a corporate culture that says:
"It's important to be a socially re~
sponsible company." It's part of who
we are, as indi viduals and as a team.
• Define your objectives clearly. Who
do you want to reach and why; what
infonnation is most important to im~
part and how will you measure success?
• Make a bottom~ line connection with
employees. Be certain they know the
answer to the question , "What's in it
for me?" We will benefit in the longrun as a company if we teach our
you th about water conservation, re~
cycling, etc.
• Form publi c~private partnerships. If
you don't have the staff or resources
to implement a program, find some~
one who does and for m a partner~
ship. It doubles your firepower and
you r goodwill.
Ma king the Grade
BHC has crafted its community edllca~
tion program to support its lo ng~ term cor~
pora te goals, and, specifically, as a com~
pany based in the state's largest city, to
se rve the inner~city school populati on .
Some of BHC's current programs illu s~
tntte the di ve rse activities to which com~
panies ca n commit resources:
• The AquQ1·ion Environmental Studies. r m e r
Scholarship. Because our business has a
need for people who excel in math, 'science and engineering, we established
a scholarship fund in the name of our
parent company at our area co mmu ~
engineering in 1935 from the University
nity fou ndation to encourage minority
of Colorado at Boulder. For the firS[ 15
years of his career he he ld engineering
youth to study these disciplines at the
college or lliliversity level.
posts with seve ra l e n ergy util it ies,
including eight years with O hio Public
• Teacher Training Workshops. WorkService Co.
ing wi th the Board of Education, in
In 1950 he joined Arizona Edison Compartnership with a local non~profit
organization, we des igned and pre~
pany of Phoenix , as a vice president. Two
sented a one~half~day training pro~
years later when a merger created Ari~
zona Public Service Company, Lucking
gram on env ironmental science for
was designated general superintendent of
teachers in grades three to five to
enhance the science curriculum in
power supply. In 1952, he advanced to
vice president, operat ions. In 1955 at age
the Bridgeport public schools.
41 , Lucking was elec ted president of Ari• Partnerships with Public Schools . The
zona Public Service Co. H e became chair~
Adopt~A~School Program, active in
man of the board eleven years later, and
many communities, matches local
served in that capacity until 1972.
businesses with a publi c school as a
Active throughout his career in nu ~
resou rce to share ti me, ta lent and
merous business and civic organizations,
financial su ppo rt to enhance thi
Lucking served as a director of the Boy
school environment. O ur cu rrent
Scout councils in bo th Phoenix and
partnersh ip with an inner~c ity ell
Bergen County, New Jersey. He was a
ementary school is in its third yead
director of the In ternational Solar Energy
and has spawned innovative pro J
grams to motivate and reward stu~l
Associat ion and was named an honorary
d irector in 1971. H e served on the boards
dent performance. Two such pro~
of directors of the New Mexico and Ari~
grams are t he BH C Buddies after-'
zona Land Company and United Jersey
school men tor program and the in~
Bank of H ackensack, New Jersey. H e was
stallation of a 1 2~s ta tion computer t
also chairman of the Commerce and In~
lab, made possible through a part- l
dustry Association of Northern N ew Jer~
nership with ou r computer supplier,
sey in 1977- 78.
Digital Equipment Corporation.
His family would welcome memorial
• Environmental Education. BHe was I
contributions in his name to the A ll Saints
among the fi rst water companies to
Episcopal Day School, in care of All Saints
allow limited public access to its wa~
Episcopal Church and Day School, 6300
tersh ed lands for hiking and fish ing.
North Central Avenue, Phoenix, AZ
In April 1992, we dedicated a 40850 12.
mile trail system called Saugatuck
Va lley Trails. Special emphasis is
placed on the tra ils as an educational
reso urce, and as a destination for in ~
ner-cit y youth for guided field trips.
The water utili ty industry, by its pres~ . •
ence in virtually every community in the
cou ntry, is well positioned to support our
education system th rough schoo l~business
Economics, University of North Caro~
partnerships. Our conce rn for education
!ina, an MSEE in Environmental Eng i ~
should be a natural extension of our con~
neering, Johns Hopkins University, and a
cern for our employees and our c us tom~
BES, Engineering Science, John Hopkins
ers. We have an obligatio n to our indus~
University.
try and the communities we serve to bring
He will be located in the Philadelphia,
about a change-and the sooner we all
PA, office.
begin, the better. ~
1992
vICeS
Expert
W INTER 1992
63
PSWC's Vice President Retires
Jerry A. Sacchetti, Vice President-Public Relations for Philadelphia Suburban
Water Company retired on October 1
after more than forty-six years of service
to the company.
Sacchetti, from Havertown, PA, is well
known for his work in many community
and civic organizations in Delaware and
Montgomery Counties. He served as
Chairman of the Main Line Chamber of
Commerce, President of the Bryn Mawr
Business Association, and is a past president of the Haverford Township Rotary
Club. He served on the Delaware County
Economic Development Authority and is
currently the Chairman of the Haverford
Township Planning Commission.
Sacchetti started his career with Philadelphia Suburban Water Company in
1946 as a meter reader. Over the years, he
has held positions in construction, distribution and administration. He served as
executive assistant to the President of the
Johnnie M. Overton has been named
Senior Vice President of Florida Cities
Water Company (FCWC) and Poinciana
Utilities Inc. (PUI). With headquarters
in Sarasota, FCWC and PUI constitute
one of Florida's largest private water and
wastewater utilities.
company from 1974 to 1978 and was
elected Vice President-Public Relations
in 1979.
Mr. Sacchetti plans to remain in the area
and reside in Haverford Township with his
wife, Joanne and their two children.
Pishkur President of
Ohio Water Service Co.
Ohio Water Service Co. is pleased to
announce that as of August 1, Walter J.
"Buzz" Pishkur has assumed the duties of
President due to the retirement of Wallace
E. DeArment.
Pishkur is a native of Hubbard, OH,
who began his utility career working as
a meter reader, chemist and biologist
for the Hubbard Water Department in
1970. He was originally employed by
Ohio Water Service Co. in 1980 as
Office Manager of the Struthers District,
and then moved to the Columbus area
to assume the position of District Manager at the Company's former Marysville
District. In 1986, he accepted the position of Vice President and General
Manager of Inter-State Water Company
in Danville, IL, a subsidiary of Consumers Water Co. Pishkur is a 1986 cum
laude graduate of Ohio State University
and received his MBA from the Univer64
NAWCWATER
New VP at FCWC
sity of Illinois at Urbana-Champaign in
1992. He is an avid golfer, a basketball
referee and active in community affairs.
He and his wife currently reside in Poland,OH.
~
In making the announcement, Paul H.
Bradtmiller, Executive Vice President and
Chief Operating Officer of FCWC/PUI,
stated that "Johnnie brings a unique blend
of utility engineering and operating experience and financial management skills
to the job." In his capacity as Senior Vice
President, he will be responsible for staff
management of operations, engineering
and budget development for the six divisions that comprise the corporation serving 33,911 water customers and 27,440
wastewater customers in Central and
Southwest Florida.
Prior to joining Florida Cities Water
Co., Overton was the Senior Utility Construction Manager with the City of Cape
Coral Utilities where he managed the design and construction of the City's $200
million utility capital improvement program. Overton began his career in utility
operations and management at ITT Palm
Coast Utility Corporation where he was
Vice President, Director of Engineering
and Field Operations prior to joining Cape
Coral Utilities.
He holds a Bachelor of Civil Engineering Technology from Southern Technical Institute, Marietta, Georgia, and is a
registered Professional Engineer. Overton
and his wife, Judy, reside in Sarasota,
Florida and have three grown children.
BHC Announces
Two Executive Appointments
James S. McInerney, president of
Aquarion Company's Bridgeport Hydraulic
Company (BHC) subsidiary, announced the
appointment of two executives to new positions effective December 1, 1992.
Glenn Thornhill, 45, has been named
President of BHe's Stamford Water Company subsidiary. Thornhill succeeds Mark
L. Johnson, who announced in September
his intention to leave the company to pursue other opportunities. Thornhill will
challenge and help our company realize its
strategic goals."
Thornhill, who lives in Bethel, joined
SWC in 1972 as a staff engineer. He left
SWC in 1975 to become engineering liaison for water operations for Citizens Utilities in Stamford, and returned to SWC in
1979 and then held various positions of
increasing responsibility. He was promoted
to vice president of engineering and development for BHC in 1990.
Glenn Thornhill
Charles V. Firlotte
continue as BHe's Vice President, Engineering and Development, along with responsibility for division operations in
Litchfield County and the Valley.
C harles V. Firlotte, 38, has been appointed vice president, operations, and will
assume responsibility for supply operations,
water quality control services and environmental management. These functions were
formerly under the direction of Johnson,
who also is vacating his position as vice
president of environmental management,
BHe. Firlotte continues his current responsibility for customer and administrative services and as vice president, administration
and human resources for Aquarion Company, a post he has held since 1991.
"Weare pleased to announce these management changes," said McInerney. "Both
Glenn and Chuck have clearly demonstrated
the leadership qualities necessary to lead
our regulated business through this decade
of increasing regulatory and financial
He holds a bachelor of science degree in
civil engineering from the University of
Connecticut and an executive master's degree in business administration from the
University of New Haven. He is a member
of the Board of Directors of the Housatonic
Valley Association and the Advisory Board
of the Connecticut Pre-Engineering Program, a trustee of the Connecticut Section
of the American Water Works Association
and past president of the Connecticut Water Works Association.
Firlotte, a Huntington resident, joined
BHC in October 1987 as director of human
resources and administrative services. Prior
to that, he was director of human resources
and labor relations at Combustion Engineering Canada. He was graduated from St. Thomas University in New Brunswick, Canada
and received a master's degree in social sciences from the University of Ottawa.
He is a member of the Board of Directors
of the Science Museum of Connecticut.
Aquarion Appoints
Eugene D. Jones
to its BOD
Aquarion Company announced the
election of Eugene D. Jones to its Board
of Directors. Jones, 67, is senior vice president of Greiner, Inc., in Wallingford,
Conn., a consulting engineering firm specializing in transportation-related facilities. His election expands the Board to 11
members, and his current term will run
until the 1994 Annual Meeting of Shareholders.
"Speaking for the Board and management of Aquarion Company, we are delighted to welcome Gene Jones as a director," said Jack E. McGregor, president
and chief executive officer. "With 42 years
of professional and managerial experience,
he will bring a strong sense of leadership
and vision to the company's operating
strategy."
A registered professional engineer in
several states, Jones has directed largescale engineering projects both in the U.S.
and abroad, including supervising the
$300-million Downtown Urban Renewal
Project in Stamford, Conn. Prior to joining Greiner in 1981, he was senior vice
president in charge of transportation
projects for Frederic R. Harris, Inc., consulting engineers.
"His 19 years as a member of the Northeast Utilities board, combined with his
considerable experience in project management, will serve us well as our utility
subsidiary completes the construction of
two major filtration plants over the next
several years," McGregor noted.
Jones is a member of several professional societies, including the American
Society of Civil Engineers, the American
Consulting Engineers Council, and the
Accreditation Board for Engineering
and Technology. Among his academic
affiliations, he has served as a trustee of
Clarkson University since 1989 and was a
trustee of Sarah Lawrence College from
1975- 1985.
Jones holds a bachelor's degree in
civil engineering from New York
University, and an honorary doctorate
from Green Mountain College. He resides
in Wilton, CT, with his wife, opera
singer Betty Jones.
WINTER 1992
65
IWC Elects Senior VP
The board of directors of IWC Resources
Corporation has elected J.A. Rosenfeld senior vice president, treasurer, and chief financial officer of the corporation and its
subsidiary, the Indianapolis Water Company. He has been the corporation's financial consultant since January 1992, and currently is president and director of MSA
Realty Corporation, a publicly traded real
estate investment trust.
Rosenfeld was executive vice president
and chief financial officer of Melvin
Simon & Associates, Inc., the nation's
second largest shopping center developer,
from 1984 to 1990.
A graduate of Syracuse University,
Rosenfeld is a certified public accountant in
the states of Texas, Louisiana, Michigan
and North Carolina, a member of the American Institute of Certified Public Accountants, and a member of the Texas Society of
Certified Public Accountants.
Rosenfeld is a member of the boards of
Mid-Central Advisory Board of Protection
Mutual Insurance Company, Indianapolis
Entrepreneurship Academy, Indiana/ World
Skating Academy and Research Center,
and Junior Achievement.
Suburban Appoints
New Communications Administrator
Suburban Water Systems, La Puente,
CA-based water utility serving approximately 65,000 households and businesses
within the San Gabriel Valley and
La Mirada/Whittier area, announced the
appointment of Marci Ramirez as communications administrator.
"We are pleased to welcome Marci as
part of the Suburban team, Chief Operating Officer Mike Quinn said. "Marci's
background and skills in marketing communications will contribute to Suburban's
on-going commitment to work as a neighborhood partner with the community."
"As a company also dedicated to being
number one with its employees and customers, Suburban looks forward to enhancing its communications activities
through Marci's efforts," Quinn added.
As former communications director for
The East Los Angeles Community Union,
an economic development corporation
with 600 employees, Ramirez was responsible for spearheading several new
internal and external communications
marketing programs for the company and
its 15 subsidiaries, in addition to developing and establishing its first annual
scholarship banquet and directing company-wide promotional activities.
Active in community affairs, Ramirez
serves as a board member for the Hispanic Women's Council, the Los Angeles
County Parks and Recreation Big Event
Foundation, and is a member of several
other business and professional organizations. A native of East Los Angeles who
majored in journalism, Ramirez attended
East Los Angeles College and California
State University, Los Angeles.
Ramirez said she was particularly pleased
to work for a company recognized for its
strong business ethics, commitment to excellence and progressive management. "I
look forward to contributing to Suburban's
continued growth by developing and managing innovative programs that will have a
bottom-line impact," she said.
Severn Trent Expands
Severn Trent (U.S.), Inc. (STUS), the
U .S. based management and service headquarters of Severn Trent Plc, announced
the appointment of John (Jack) D.
Bonomo as President of its recently formed
subsidiary, ST Environmental Services,
Inc. (STES).
In announcing the appointment, Thomas P. Gorman, President of STUS, said,
"Bonomo's charge will be to expand the
firm's market throughout the U.S. STES
will offer a wide range of operational and
management choices to municipal utilities in the water and wastewater management business." These include: contract
operations; utility management; build, operate, and management programs; operations and maintenance services; and training.
"J ack Bonomo brings 20 years of expe66
NAWCWATER
rience in the municipal contract operations and privatization market to our expanding efforts in the U.S. which we hope
will help municipalities solve their management, operations and maintenance
problems." In an earlier move, Severn
Trent acquired an Eastern Pennsylvania
contract operations firm and now operates seven facilities in the mid-Atlantic
region and South Carolina.
"STES's goal is to bring the parent
company's extensive utility and
privatization experience to the U.S. market," says Bonomo. "The U.S. economy
has forced municipalities and state agencies to take a hard look at the private
sector as an option to help alleviate their
financial woes."
"The timing of Severn Trent's entry
into the U.S. privatization market could
not have been better as municipal and
state governments have been more receptive to the concept," adds Bonomo.
WATER For PEOPLE Names
New Executive Director and Program Director
WATER For PEOPLE has named two
top executives to manage the organization's international assistance programs.
C harles C. Johnson, Jr. will guide WAT ER For PEOPLE activities as executive
director. Paul A. Sobiech will be project
director for the organization's Eastern European Initiative.
WATER For PEOPLE is a non-profit
organization created and sponsored by the
A merican Water Works Association
(A WWA). The organization conducts
programs to assist less-developed countries increase the quality and availability
of local drinking water supplies.
As executive director, Johnson will manage the organization's programs and volunteer structure. More than 2,500 people from
the water supply community have volunteered to assist WATER For PEOPLE. The
organization is currently conducting four
projects including building a gravity-fed distribution system in south central Mexico
and rehabilitating a well that supplies 800
households in Guatemala.
Johnson was president of c.c. Johnson
& Malhotra, Inc., a Washington, D.C.based consulting firm. Prior to that, he
was assistant surgeon general of the U.S.
Public Health Service and assistant commissioner of Health in New York City.
Johnson's international experience includes representing the U.S. Government
at the World Health Assembly meetings,
the Pan African Water Conference, and
India's first National Water Survey. A
graduate of Purdue University, Johnson
sits on the Board of National Sanitation
Foundation International and the Water
Science and Technology Board of the
National Academy of Sciences. He is past
chairman of the National Drinking Water Advisory Council, a Distinguished
Engineer, Purdue University, and an
A WW A Fuller Awardee.
Sobiech will lead a WATER For PEOPLE
initiative in eastern Europe and work with
A WWA Section projects. Under a twoyear grant from the U.S. Environmental
Protection Agency, WATER For PEOPLE
will provide technical assistance to Poland,
Hungary, Czechoslovakia, and Bulgaria on
drinking water issues.
Prior to joining WATER For PEOPLE,
Sobiech spent two years as a water resource engineer with the U.S. Peace Corps
in Thailand. Sobiech holds a bachelor of
science degree in Civil Engineering from
Purdue University and a master's degree
from the Indiana University School of
Public and Environmental Affairs.
WATER For PEOPLE was created as an
international assistance program through
which water supply professionals from
around the world can volunteer their time
and expertise. The organization was designed
to help governmental and nongovernmental organizations that are unable to provide
any type of effective drinking water and
basic sanitation systems for their local populations. WATER For PEOPLE actively seeks
donations of equipment, supplies, and services from individuals, water and sanitation
utilities, consultants, manufacturers, etc., for
use overseas.
,
Aquarion Appoints Manager
of Shareholder Services
Aquarion Company has announced the
appointment of Patricia M. Johnson as manager of shareholder services. In this position, Johnson will have responsibility for
such shareholder-related functions as compliance reporting to the Securities and Exchange Commission and the New York
Stock Exchange, proxy solicitation and annual meeting preparation, stock transfer, and
shareholder assistance. In addition, she will
administer the company's dividend reinvestment and common stock purchase plan,
and attend to corporate housekeeping matters related to the board of directors.
Prior to joining Aquarion, where she had
been a consultant since 1991, Johnson held
senior paralegal positions with several major corporations in Stamford. She served as
assistant secretary and legal administrator
for General Host Corporation from 1986 to
1990, as a legal assistant for shareholder
services with The Singer Company from
1985 to 1986, and as assistant to the general
counsel of Unidynamics Corporation from
1977 to 1985.
Johnson received a B.A. in English from
Sacred Heart University in 1975. She is a
volunteer with Make-A-Wish Foundation.
Lau Joins CDM
Camp Dresser & McKee Inc. (CDM),
the international environmental consulting
engineering firm, announces that Daniel
Lau has joined the firm and will direct
CDM's stormwater management projects in
the midwestern U.S. A specialist in
stormwater management, Lau has more than
17 years of experience in stormwater, flood
control, and water resources. Based in CDM's
Chicago, Illinois office, he also will oversee
stormwater projects and business development in Minnesota, Wisconsin, Iowa, and
Missouri.
A registered professional engineer in
Illinois, Iowa, Michigan, Minnesota, and
Wisconsin, Lau holds a bachelor's degree
in civil engineering from Michigan State
University and a master's degree in
hydrology and water resources from Colorado State University. He is a member of
the American Society of Civil Engineers,
the American Water Resources Association, and the Consulting Engineers
Council of Illinois.
WINTER 1992
67
etcetera • etcetera • etcetera • etcetera
Haskew Tapped By US
Water Supply Community
George M. H askew, Jr., retired presi~
dent of Hackensack and Spring Va lley
water co mpani es, will represent the
n ation's water ut ility industry in negotia~
[ions with the US Environmental Protcc,
tion Agency (EPA) on an important future drink ing wate r q uality regulation.
H askew was selected by the American
Wa ter Works Association (A WW A) to
part ic ipate in negotiat io ns o n a standard
limiting by,products of disinfection in
dr inking water.
"Modern water treatment using c h lo,
rine and other disinfectants has vi rtually
eliminated waterborne d iseases like tv'
phoid and cho lera in t his country,"
Haskew said. "Our negotiating effort will
be aimed at balanci ng this known benefit
against the pote ntial long-term health effects of disinfect ion by,products, which
still are not well understood by scientists.
The onl y d isinfection by-products li mited by cu rr ent reg ula t ions a re
trihalomethanes, related to chlorine dis~
infection."
"This is the firs t time a drinking water
rule will be negotiated this way," Haskew
sa id . "But it's necessary because EPA
doesn 't have the kind of scientific evi~
dence to support the traditional rule~mak ~
ing process."
He added that EPA hopes the process
will res ult in garnering public consensus
prior to the new rul e's proposal. The ne~
gotiating team, co nsisting of representatives of health agenc ies, the water suppl y
communi ty, en vironmen tal and citizens
groups, will meet over the next six months.
Haskew said the resulting rule would be
promulgated around June of 1993, and
wou ld go through public comment and
possible revision, with the fi nal rule going in to effect in 1995.
Haskew, who retired September 1 as president of the Hackensack and Spring Valley
water companies, continues to serve as vice
chairman of the board of the ir parent firm,
United Water Resources.
68
NAWCWATER
Drake Named Honorary Member of AWWA
Camp Dresser & McKee Inc. (COM),
the international en vironmenral consult~
ing enginee ring firm, announced that Ri~
chard C. Drake has been named an hon~
orary member of the American Water
Works Associatio n (AWWA), the nonprofit scientific and educational o rgani~
zation whose membership exceeds 54,000
drinking water professionals worldwid e.
Drake, a vice president of COM, serves as
a business development coordinator for
th e fi rm's Northeast Division .
Drake accepted the honor in June at
the associat ion's annu al conference in
Vancouver, B.C. He was cited for his dedi~
cation to A WW A across a broad s pec~
trum of regional and national act ivities,
and specifically fo r his leadership and contribut ions to the assoc iation's annual confei'ence while se rving as chair of the Confe rence Manage men t Committee.
Drake previously se rved as an internationa l d irector of A WW A and is a past
recip ient of the association's prestigious
George Warren Fuller Award , which recognizes distinguished service in the water
supply field.
Drake is also active in the America n
Public Works Association, the National
Association of Water Companies, and the
Water Environment Federation. He is a
resident of Cohasset, Massachusetts.
Sierra Pacific Power
Opens HHomework Hotline"
A II elementary and middle school students in Washoe County, NY, now have
a free, va luable learning resource at their
d isposal thanks to a program introduced
by Sierra Pacific Power Co.
ul-lomework Hotli ne" reinforces classroom learn ing by providing after~school
homework assistance to students and their
parents. The new program is endorsed by
the Washoe Co un ty School Di stri ct .
Those in need of ass istance may call and
reach certified teachers who can help answer homewo rk questions, ass ist students
in und erstanding and completing ass ign~
ments, and hel p parents more effectively
aid the ir children at home.
The "Hotline," a pilot program in 15
area schools last year, answered more than
10,000 homework questions and improved
the q uality of the educati onal experience.
It is the first program of its kind in the
West, and only the second such program
in the coun t ry.
"In establishing the Homework Hotline,
Sierra Pacific has taken the lead among
utilities in the West by committing to help
improve America's primary and secondary
education systems," said William L Keep~
ers, president of SietTa Pacific Power. 'We
see this program as an invesunent in the
futu re of our community."
H omework Hotline is located at Roger
Corbett Elementary School and operates
from 4 to 7:30 p. m., Monday through
Thursday. The Hotline staff has access to
textbooks cu rren tly being used in the
school district. With the books and other
reference materials, teachers are able to
provide quick and accurate guidance to
callers. In addi tion, one teacher fluent in
Spanish is ava ilab le each evening.
O n a typ ical evening, calls for assistance begin as soon as the phones are
switched on . As the teacher works with
t he caller, he or she completes a short
ch ecklist, including infor mation on
whether the caller is a child or an adult;
grade and school attended; and the con tent or subject of the call. The checklist
information will be used by the school
district for fut ure planning to determine
trends or problem areas. For those calling
in before 4 p.m. or after 7:30 p.m., a voice
mail featll re will record the call and direct the next ava ilable teacher to the call~
ing stud ent or pa rent.
Aquarion CEO Testifies Before
Congressional Commitiee
Testifying before a Congressional sub~
comm ittee hearing in Milford, CT,
Aquarion Company President and Chief
Executive Officer Jack E. McGregor
voiced his company's strong support for
pend ing legislation on water quality. Com~
menting on H.R. 5070, the DeLauroLowey Water Pollution Control and Estuary Restoration Financing Act of 1992,
McGregor said, "We believe this bill will
strengthen the Clean Water Act by providing the needed environmental and eco~
nomic incentives to restore and protect
our estuaries from any more deterioration
and will provide munic ipalities the help
they need through re~ autho riz ing the Na~
tiona I Estuaries Program and State Re~
votving Funds Program to implement es~
tuary management pLans. n
Sponsored by Congresswomen Rosa
DeLauro (D-Conn.) and Nita Lowey (DN.Y.), H.R. 5070 is designed to clean up
11 of the country's most precious and
endangered estuaries, including Long ls~
land Sound, through the National Estu-
T he York Water Co.
Honored
The York Water Company's 1991 Annual Report, commemorat in g the
Company's 175thanniversary, has beendou~
bly honored in regional graphics design competitions.
The Arulllal Report was given a flgold" in
the annual Lancaster Ad Club Cameron
Awards competition and it received a merit
award from the Ad Club of Central Pennsylvania ADDY judges.
This special commemorative Annual Re~
port presented biographies of the nine
fOllnders of The York Water Company
whose common goal was to reduce the dam~
age caused by fires within the rapidly growing community of York, PA. In fact, most of
the founders were members of the local vol~
unteer fire departments. A unique 175th
ann iversary seal was designed and produced
from gold foil to close the cover of the
brochure.
The York Water Company Annual Report was designed and produced by Kelly
Adams Advertising Inc. of York, PA.
ary Program (NEP), a comprehensive
management plan offered under Section
320 of the Clean Water Act.
"As an environmental company and a
partner with the Long Island Sound
T askforce, we support re~authorizing Sec~
tion 320 ... to protect threatened estuar~
ies," McGregor added. flLong Island Sound
is the largest and most densely populated
of these valuable bodies of warer and
shou ld serve as a national model for inno~
vative clean~up so lutions."
In his testimony, McGregor offered the
Water Resources Subcommittee two addi~
tions to the proposed legislation that would
"help improve water quality and stretch federal dollars so the clean-up of Long Island
Sound can continue on schedule." First, by
strengthening the Clean Water Act, require
a reduction in non~point source pollution
that cou ld place drinking water suppliers in
violation of the standards of the Safe Drinking Water Act. "Adoption of this change
will also have the salutary effect of reducing
the level of pollutants reaching estuaries'"
he nmed. According to McGregor, the same
pollutants that damage Long Island
Sound-nitrogen and other harmfu l nutri~
ents due to, among other things, run~off
from streets, highways and overfertilized
lawns-also threaten Aquarion's public wa~
ter supply watershed land.
Second, the bill should modify the
Clean Water Act to permit state funds to
be used in conjunction with private funds,
which would "encourage the establish~
ment of public/pri vate partnerships to
cons truct and manage sewage treatment
wo rks/' he said.
In his closing comments to the Subcom~
mittee, McGregor said: "1 make these sug~
gestions for one simple reason: I share your
desire to improve the water quality of Long
Island Sound. Passage of your legislation
will strengthen the NEP, a necessary step in
the process. Another important step is se~
curing adequate financial resources. Autho~
rizing public/private partnerships under the
C lean Water Act is one way to make in~
creased ... funds go further."
Public ..Private
Partnership In California
contributed by C. W. Porter
President, Dominguez Services Corp.
The West Basin, a source of ground
water in the South Bay region of Los
Ange les County, is inundated with saline
water. "Over pumping" of the basin
occurred years ago, lowering the ground
water level to below sea le ve l, thus
enabling sea water to encroach into the
basin. Although that leakage has been
largely stopped, this plume has spread over
the years as saline wells are shut down
and new wells are drilled outside the
plume, which tends to draw the plume
ever wider. All programs to correct the
situation were deemed "gigantic" and "too
costly." However, a pilot project was
started by the West Basin Municipal
Water District using a $1 million grant,
to construct a $2 million plus desalter
to pump two wells previously closed
down by Dominguez Water Corporation.
The Basin will sell this treated water to
Dominguez Water Corporati on, but in
turn contract, i.e., privatize, the opera~
tio ns to Dominguez Water. While not
large in scope, it will demonstrate the
feasibility of continued pumping from
within the plume to avo id hav ing more
wells pumping from outside the plume.
If successful, the solution to the problem
can be attacked with many smalle r
plants. Instead of waiting forever
for the financing of a gigantic plant
wh ich might or might not do the job, a
start has been made.
WINTER 1992
69
First Annual IWC "Crystal Awards"
Recipients Announced
Recipients ofIWC Resources Corporation's
first annual "Crystal Awards," recognizing outstanding service by its employees, were announced by James T. Morris, chairman, at a
special awards banquet held over the past
weekend. IWC Resources Corporation is the
holding company for the Indianapolis Water
Company and six other subsidiaries.
"The Crystal Awards were conceived and
developed by the employees ofIWC Resources
Corporation to recognize and reward superior
employee service both inside and outside the
company," Morris said. All nominees for these
prestigious awards were selected by their fellow
employees, which then were forwarded to an
independent, outside panel of judges, who selected the winners.
The Crystal Award, presented for the
company employee-of-the-year, was given
to Thomas F. Plummer, a fire inspector in
the Customer Service Department. This
award represents the "one person who has
achieved the extraordinary, and who deserves the utmost in praise." Plummer, who
last spring was struck by lightning while
restoring water service to a customer, is a
13-year employee.
Susan E. White, a Customer Service representative, received the 1992 "Sapphire
Award," as the employee who "consistently
has provided superior service while in direct
contact with company customers."
Melissa L. Berry, Human Resources representative, earned the 1992 "Ruby Award,"
honoring the employee who has "provided
consistent outstanding service to his or her
fellow employees."
A.D. Murphy, a laboratory assistant
in the Purification Department, was the
recipient of the "Emerald Award," which
honors the employee "who has demonstrated
consistent superior job performance in a
solitary atmosphere, without the benefit of
day-to-day employee or customer contact."
Burnice Head, security guard, received
the "Amethyst Award," presented to the
employee, "who has voluntarily provided
outstanding service to the community,
through school, church, charitable or civic
organizations."
More than 300 employees of IWC
Resources Corporation were eligible to
nominate their peers for the Crystal Awards.
Management was specifically excluded
from the selection process. Over 150
nominations were received by the awards
committee, which is made up of company
employees.
"Each of these employees is an outstanding representative of the quality of dedicated individuals who serve IWC Resources
Corporation and its customers. Weare indebted to each person for their service, and
respect what they represent in the highest
qualities as employees of this company,"
Morris added.
New Plant in WV
There was a cool crispness in the air on
September 29, as the mountains were starting to take on their bright yellow, orange
and red fall colors; the sound of bagpipes
added a certain mystique to the afternoon.
All in all, it was a picture postcard day as the
West Virginia-American Water Company
dedicated it's new Water Treatment Plant
in Gassaway, W.va.
On hand for the dedication, and the luncheon that preceeded, were various state
and local officals which included Patricia
Hill from U.S. Representative Bob Wise's
office, and Bob Brunner, Communications
Director for West Virginia Governor Gaston
Caperton.
Representing the American Water Works
System Inc. was G.c. Smith, Executive Vice
President; Dillard Edgemon, Regional Vice
President of the American Water Works
Service Company Inc.; and C.E. Jarrett, Vice
President and Manager of the West Virginia-American Water Company.
The dedication of the $3.5 million treatment plant started at 1:30 p.m. and was
open to the public. Posting the U.S. and
W.Va. colors to start the afternoon activi70
NAWCWATER
Gerald Smith addressing attendees at plant dedication.
ties was a Color Guard Unit from Company
A, 1092d Engineering Combat Battalion
(Corp) of the National Guard Unit in
Gassaway. Tours of the new facility were
offered along with refreshments. Providing
the entertainment for the ceremony was the
West Virginia Highlander Band from Elkins,
W.Va.
"The new treatment plant will serve the
cities of Gassaway and Sutton, and has the
additional capability to serve future growth
in Braxton County," said C.E. Jarrett.
The Gassaway Water Treatment Plant is
one of the largest construction projects in
Braxton County in 1992. The new facility is
computer automated and equipped with the
latest in water treatment technology.
It has been programmed to initiate daily
start-up procedures and monitor the entire
water treatment process, giving readings on
the slightest change in the water. The new
plant treats an average of 200,000 gallons of
water a day with the capability of producing
three times that amount if necessary.
Dates to Remember 1993
NAWC
CWA BoD Meecing
San jose, CA
j anuary 14
NAWC Pennsylvania Chapter BoD Meeting
Hershey, PA
january 20
NA we New Jersey Chapter Meeting
jamesburg, Nj
January 22
CWA BoD Meeting
San Jose, CA
February 11
NA we Pennsylvania Chapter BoD Meeting
Hershey, PA
February 17
NAWC Illinois;Missouri Chapter Meeting
Belleville, IL
February 18
CW A BoD Meeting
San jose, CA
Mareh II
NAwe Pennsylvania Chapter Meeting
Hershey, PA
March 17
NA we New Jersey Chapter Meeting
jamesburg, Nj
March 19
NA we Western Customer Service
Conference
Redondo Beach, CA
March 23-24
CWA BoD Meeting
San j ose, CA
April 8
NA we Delaware Chapter Meeting
April 14
NA we Pennsylvania Chapter BoD Meeting
Hershey, PA
April 21
CW A Spring Meeting
Sacramento, CA
May 3-4
NA we Eastern/Midwestem Customer Service
Conference
Philadelphia, PA
May 3- 5
N A we New England Chapter Meeting
May 7
NAwe Pennsylvania Chapter BoD Meeting
Hershey, PA
May 19
NA we New Jersey Chapter Meeting
Jamesburg, NJ
May21
NARUC
NA we Pennsylvania Chapter Annual
Meeting & Legislative Reception
Harrisburg, PA
june 1-2
NARUC Winter Committee Meetings
Washington, OC
February 2S-March 4
CWA BoD Meeting
San j ose, CA
june 10
Mid-America Regulatory Commissioners
Austin, TX
june 5-8
New Jersey Chapter Annual Luncheon
jamesburg, Nj
june 25
Southeastern Association of Regulatory Uti lity
Commissioners
Orlando, FL
june 13- 16
CW A BoD Meeting
San jose, CA
july 8
NA WC Pennsylvania Chapter BoD Meeting
Hershey, PA
july 21
CWA BoD Meeting
San jose, CA
August 12
CWA BoD Meeting
San jose, CA
September 9
Pennsylvania Chapter BoD Meeting
Hershey, PA
September 15
NA WC New Jersey Chapter Meeting
jamesburg, Nj
Scptember 17
CWA BoD Meeting
San jose, CA
October 14
NA WC Annual Conference
Williamsburg, VA
October 17- 21
NA WC New England Chapter Meeting
November 12
NA WC Pennsylvania Chapter Meeting
Hershey, PA
November 17
CWA Annual Meeting
Monterey, CA
November 17-20
NA we New Jersey Chapter Meeting
jamesburg, Nj
November 19
CWA BoD Meeting
San josc,CA
December 9
NA WC Pennsylvania Chapter BoD Meeting
Hershey, PA
December 15
Westcrn Conference of Public Service
Comm iss ioners
Anchorage, AK
june 13- 17
16th National Conference of Regulatory
Attorneys
Whitefish, MT
june 13-16
71st National Conference of Regulatory Utility
Commission Engineers
Portland, ME
june 14-17
New England Conference of Public Utilities
Comm issioners
Dixville Notch, NH
june 27-30
38th Great Lakes Conference of Public
Utilities Commissioners
White Sulphur Springs, WV
july 11- 15
NARUC Summer Committee Meetings
San Francisco, CA
july 25-29
105th NARUC Annual Convention
New York, NY
November 15-18
AWWA
A WWA BoD Meeting
New Orleans, LA
january 27- February 1
A WW A Annual Conference
San Antonio, TX
june 6-10
A WWW Distribution System Symposium
San Diego, CA
September 25- 29
WINTER 1992
71
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I;
NAWC Officers and Chairman of the Board: Floyd E. Wicks, Ronald S. Dungan, jack E. McGregor, j. Richard Tompkins, jay W. Weinhardt, William D. Holmes, j .
james Barr, Robert A. Luksa, Sharon L. Gascon and james B. Groff.