2010 Pennsylvania Code
Title 66 - PUBLIC UTILITIES
Chapter 5 - Powers and Duties
529 - Power of commission to order acquisition of small water and sewer utilities.

     § 529.  Power of commission to order acquisition of small water
                and sewer utilities.
        (a)  General rule.--The commission may order a capable public
     utility to acquire a small water or sewer utility if the
     commission, after notice and an opportunity to be heard,
     determines:
            (1)  that the small water or sewer utility is in
        violation of statutory or regulatory standards, including,
        but not limited to, the act of June 22, 1937 (P.L.1987,
        No.394), known as The Clean Streams Law, the act of January
        24, 1966 (1965 P.L.1535, No.537), known as the Pennsylvania
        Sewage Facilities Act, and the act of May 1, 1984 (P.L.206,
        No.43), known as the Pennsylvania Safe Drinking Water Act,
        and the regulations adopted thereunder, which affect the
        safety, adequacy, efficiency or reasonableness of the service
        provided by the small water or sewer utility;
            (2)  that the small water or sewer utility has failed to
        comply, within a reasonable period of time, with any order of
        the Department of Environmental Resources or the commission
        concerning the safety, adequacy, efficiency or reasonableness
        of service, including, but not limited to, the availability
        of water, the potability of water, the palatability of water
        or the provision of water at adequate volume and pressure;
            (3)  that the small water or sewer utility cannot
        reasonably be expected to furnish and maintain adequate,
        efficient, safe and reasonable service and facilities in the
        future;
            (4)  that alternatives to acquisition have been
        considered in accordance with subsection (b) and have been
        determined by the commission to be impractical or not
        economically feasible;
            (5)  that the acquiring capable public utility is
        financially, managerially and technically capable of
        acquiring and operating the small water or sewer utility in
        compliance with applicable statutory and regulatory
        standards; and
            (6)  that the rates charged by the acquiring capable
        public utility to its preacquisition customers will not
        increase unreasonably because of the acquisition.
        (b)  Alternatives to acquisition.--Before the commission may
     order the acquisition of a small water or sewer utility in
     accordance with subsection (a), the commission shall discuss
     with the small water or sewer utility, and shall give such
     utility a reasonable opportunity to investigate, alternatives to
     acquisition, including, but not limited to:
            (1)  The reorganization of the small water or sewer
        utility under new management.
            (2)  The entering of a contract with another public
        utility or a management or service company to operate the
        small water or sewer utility.
            (3)  The appointment of a receiver to assure the
        provision of adequate, efficient, safe and reasonable service
        and facilities to the public.
            (4)  The merger of the small water or sewer utility with
        one or more other public utilities.
            (5)  The acquisition of the small water or sewer utility
        by a municipality, a municipal authority or a cooperative.
        (c)  Factors to be considered.--In making a determination
     pursuant to subsection (a), the commission shall consider:
            (1)  The financial, managerial and technical ability of
        the small water or sewer utility.
            (2)  The financial, managerial and technical ability of
        all proximate public utilities providing the same type of
        service.
            (3)  The expenditures which may be necessary to make
        improvements to the small water or sewer utility to assure
        compliance with applicable statutory and regulatory standards
        concerning the adequacy, efficiency, safety or reasonableness
        of utility service.
            (4)  The expansion of the franchise area of the acquiring
        capable public utility so as to include the service area of
        the small water or sewer utility to be acquired.
            (5)  The opinion and advice, if any, of the Department of
        Environmental Resources as to what steps may be necessary to
        assure compliance with applicable statutory or regulatory
        standards concerning the adequacy, efficiency, safety or
        reasonableness of utility service.
            (6)  Any other matters which may be relevant.
        (d)  Order of the commission.--Subsequent to the
     determinations required by subsection (a), the commission shall
     issue an order for the acquisition of the small water or sewer
     utility by a capable public utility. Such order shall provide
     for the extension of the service area of the acquiring capable
     public utility.
        (e)  Acquisition price.--The price for the acquisition of the
     small water or sewer utility shall be determined by agreement
     between the small water or sewer utility and the acquiring
     capable public utility, subject to a determination by the
     commission that the price is reasonable. If the small water or
     sewer utility and the acquiring capable public utility are
     unable to agree on the acquisition price or the commission
     disapproves the acquisition price on which the utilities have
     agreed, the commission shall issue an order directing the
     acquiring capable public utility to acquire the small water or
     sewer utility by following the procedure prescribed for
     exercising the power of eminent domain pursuant to the act of
     June 22, 1964 (Sp.Sess., P.L.84, No.6), known as the Eminent
     Domain Code.
        (f)  Separate tariffs.--The commission may, in its discretion
     and for a reasonable period of time after the date of
     acquisition, allow the acquiring capable public utility to
     charge and collect rates from the customers of the acquired
     small water or sewer utility pursuant to a separate tariff.
        (g)  Appointment of receiver.--The commission may, in its
     discretion, appoint a receiver to protect the interests of the
     customers of the small water or sewer utility. Any such
     appointment shall be by order of the commission, which order
     shall specify the duties and responsibilities of the receiver.
        (h)  Notice.--The notice required by subsection (a) or any
     other provision of this section shall be served upon the small
     water or sewer utility affected, the Office of Consumer
     Advocate, the Office of Small Business Advocate, the Office of
     Trial Staff, the Department of Environmental Resources, all
     proximate public utilities providing the same type of service as
     the small water or sewer utility, all proximate municipalities
     and municipal authorities providing the same type of service as
     the small water or sewer utility and the municipalities served
     by the small water or sewer utility. The commission shall order
     the affected small water or sewer utility to provide notice to
     its customers of the initiation of proceedings under this
     section in the same manner in which the utility is required to
     notify its customers of proposed general rate increases.
        (i)  Burden of proof.--The Law Bureau shall have the burden
     of establishing a prima facie case that the acquisition of the
     small water or sewer utility would be in the public interest and
     in compliance with the provisions of this section. Once the
     commission determines that a prima facie case has been
     established:
            (1)  the small water or sewer utility shall have the
        burden of proving its ability to render adequate, efficient,
        safe and reasonable service at just and reasonable rates; and
            (2)  a proximate public utility providing the same type
        of service as the small water or sewer utility shall have the
        opportunity and burden of proving its financial, managerial
        or technical inability to acquire and operate the small water
        or sewer utility.
        (j)  Plan for improvements.--Any capable public utility
     ordered by the commission to acquire a small water or sewer
     utility shall, prior to acquisition, submit to the commission
     for approval a plan, including a timetable, for bringing the
     small water or sewer utility into compliance with applicable
     statutory and regulatory standards. The capable public utility
     shall also provide a copy of the plan to the Department of
     Environmental Resources and such other State or local agency as
     the commission may direct. The commission shall give the
     Department of Environmental Resources adequate opportunity to
     comment on the plan and shall consider any comments submitted by
     the department in deciding whether or not to approve the plan.
     The reasonably and prudently incurred costs of each improvement
     shall be recoverable in rates only after that improvement
     becomes used and useful in the public service.
        (k)  Limitations on liability.--Upon approval by the
     commission of a plan for improvements submitted pursuant to
     subsection (j) and the acquisition of a small water or sewer
     utility by a capable public utility, the acquiring capable
     public utility shall not be liable for any damages beyond the
     aggregate amount of $50,000, including a maximum amount of
     $5,000 per incident, if the cause of those damages is
     proximately related to identified violations of applicable
     statutes or regulations by the small water or sewer utility.
     This subsection shall not apply:
            (1)  beyond the end of the timetable in the plan for
        improvements;
            (2)  whenever the acquiring capable public utility is not
        in compliance with the plan for improvements; or
            (3)  if, within 60 days of having received notice of the
        proposed plan for improvements, the Department of
        Environmental Resources submitted written objections to the
        commission and those objections have not subsequently been
        withdrawn.
        (l)  Limitations on enforcement actions.--Upon approval by
     the commission of a plan for improvements submitted pursuant to
     subsection (j) and the acquisition of a small water or sewer
     utility by a capable public utility, the acquiring capable
     public utility shall not be subject to any enforcement actions
     by State or local agencies which had notice of the plan if the
     basis of such enforcement action is proximately related to
     identified violations of applicable statutes or regulations by
     the small water or sewer utility. This subsection shall not
     apply:
            (1)  beyond the end of the timetable in the plan for
        improvements;
            (2)  whenever the acquiring capable public utility is not
        in compliance with the plan for improvements;
            (3)  if, within 60 days of having received notice of the
        proposed plan for improvements, the Department of
        Environmental Resources submitted written objections to the
        commission and those objections have not subsequently been
        withdrawn; or
            (4)  to emergency interim actions of the commission or
        the Department of Environmental Resources, including, but not
        limited to, the ordering of boil-water advisories or other
        water supply warnings, of emergency treatment or of
        temporary, alternate supplies of water.
        (m)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Capable public utility."  A public utility which regularly
     provides the same type of service as the small water utility or
     the small sewer utility to 4,000 or more customer connections,
     which is not an affiliated interest of the small water utility
     or the small sewer utility and which provides adequate,
     efficient, safe and reasonable service. A public utility which
     would otherwise be a capable public utility except for the fact
     that it has fewer than 4,000 customer connections may elect to
     be a capable public utility for the purposes of this section
     regardless of the number of its customer connections and
     regardless of whether or not it is proximate to the small sewer
     utility or small water utility to be acquired.
        "Small sewer utility."  A public utility which regularly
     provides sewer service to 1,200 or fewer customer connections.
        "Small water utility."  A public utility which regularly
     provides water service to 1,200 or fewer customer connections.
     (Apr. 16, 1992, P.L.149, No.27, eff. 60 days)

        1992 Amendment.  Act 27 added section 529.
        References in Text.  The Department of Environmental
     Resources, referred to in this section, was abolished by Act 18
     of 1995. Its functions were transferred to the Department of
     Conservation and Natural Resources and the Department of
     Environmental Protection.