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Berkeley Co. water customers could see 22 percent rate hike

April 23, 2010|By MATTHEW UMSTEAD

MARTINSBURG, W.Va. -- Customers of Berkeley County's public water service could see at least a 22 percent increase in their bills if the West Virginia Supreme Court of Appeals upholds a judge's order that deemed capacity improvement fees to be illegal.

"If we lose (the) ability to generate this revenue, it's going to cause a huge shifting of cost burdens to the customers," Gregory S. Rhoe, chairman of the Berkeley County Public Service Water District board, told the Berkeley County Commission on Thursday.

Rhoe said the increase was a conservative estimate and does not include a pending proposal by the water district to increase rates by 8.5 percent. The tariff increase is pending before the West Virginia Public Service Commission, which regulates public utilities in the state.

"I don't think that's an exaggeration of the number," Rhoe said.

The increase could be higher because litigation filed by Larry V. Faircloth Realty Inc. against the county's water and sewer districts has been "disruptive" to the utilities' access to financing through bond markets, Rhoe said.

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"If we are perceived as a higher risk for borrowing in the future and bondholders demand higher rates of interest, that will significantly increase the cost going forward," Rhoe said.

The capacity improvement fees, which Judge Elliott E. "Spike" Maynard ruled in January only were legal if a county had a zoning ordinance in effect, have been used to finance $20 million in improvements to the water district's system since the fees were collected beginning in 2005, Rhoe said.

The county water and sewer districts only were allowed to collect the fees after the Public Service Commission authorized the county utilities to do so, Rhoe said.

The districts on April 7 appealed Maynard's decision to the West Virginia Supreme Court of Appeals, according to Berkeley County Circuit Clerk Virginia M. Sine's office.

The high court agreed last week to continue a stay that was granted March 26 by Judge John L. Henning, according to court records. Henning was appointed to the case after Maynard opted to run for Congress in the 1st District in southern West Virginia. The judges in the 23rd Judicial Circuit have recused themselves from hearing the lawsuit.

In granting the stay, the high court adopted Henning's ruling that capacity improvement fees collected by the utilities since Feb. 16, when Maynard's decision was recorded in Sine's office, be deposited into "segregated interest bearing escrow accounts." The utilities currently collect a total of $6,770 per proposed residential building lot as part of financing upgrades to their respective systems.

The money would be refunded if the Supreme Court refuses to grant the utilities' petition for appeal or the Supreme Court upholds Maynard's decision, according to Henning's order.

Paul S. Fisher, the water district's executive director, said less than half of the $64 million in improvements made in the last decade were paid through water rate increases.

The proposed rate increase request is needed because of a significant decline in water use by all classes of customers, Fisher said.

If the pending rate increase is approved, a customer who uses 4,500 gallons per month would see an increase from $32.40 to $35.15 per month, Fisher said.

The minimum bill would be $19.42, less than the previous minimum bill of $19.95, Fisher said.

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