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PA Bulletin, Doc. No. 96-243



Termination of Proposed Rulemaking: Integrated Resource Planning for Water Utilities (52 Pa. Code § 65.21); Doc. No. L-00930077

[26 Pa.B. 756]

Commissioners Present:  John M. Quain, Chairperson; Lisa Crutchfield, Vice Chairperson; John Hanger; David W. Rolka; Robert K. Bloom

Public meeting held
July 20, 1995

Opinion and Order

By the Commission:

   On February 12, 1988, the Commission promulgated regulations for the purpose of implementing a lease cost planning strategy in the electric and gas industry. On April 2, 1993, the Commission issued an Order requesting comments on initial draft regulations for integrated resource planning (IRP) for water utilities. In the Commission's judgment, there were reasons to inquire whether a similar strategy for the water industry would be appropriate.

   One of the underlying premises was that IRP as applied to the electric and gas utilities was easily transferred to water utilities. Based on the comments received in this docket, we now conclude that this premise was not accurate.

   The development of the IRP principles for the electric and gas industry was undertaken to achieve certain objectives in consideration of characteristics unique to those two industries. The water industry differs in many ways to those industries.

   One of the main reasons for the IRP in the electric and gas industry was to control rapid growth in a cost effective manner. Over the past two decades, the water industry has actually experienced a decline in per customer water demand. Further, unlike the electric industry there are no new water consuming products introduced in the home or industry creating additional water requirements such that new source development would be necessary. In fact, the water industry is experiencing a decline in water usage on a per capita basis due to conservation efforts and the increasing availability and use of water efficient fixtures such as dishwashers, shower heads and low consumption water closets.

   The investment in the quality of the product differs from the electric and gas industries. The major challenge for the water industry is upgrading treatment and distribution facilities for existing customers rather than building new supplies to meet growth in per customer demand. The difficulty is that water must be treated to exacting standards so as to comply with the Safe Drinking Water Act.

   The Commission is not in a position to effectively implement a comprehensive, Statewide IRP since its jurisdiction does not extend to all water suppliers. There are also many regulatory agencies with broad jurisdictional responsibilities for water resource management that are in a better position to review components of an IRP. These agencies include the United States Environmental Protection Agency, the Delaware River Basin Commission, the Susquehanna River Basin Commission and the Pennsylvania Department of Environmental Protection which have the legislative and regulatory responsibilities to manage and control water withdrawal of all users. There is the potential for redundancy and/or conflict between the Commission and the other regulatory agencies. It would be inappropriate for this Commission to impose IRP requirements on the regulated water utilities in a manner that may not be consistent with IRP policies and guidelines for regulatory agencies which have broader jurisdictional authority and greater responsibility for total water management.

   The IRP goal states that the filing of planning information will provide to the Commission information that is needed for the Commission to evaluate the needs of water utilities. The proposed regulations will not provide this information. An effective IRP must include all jurisdictional water companies. The small, troubled water companies are the companies that the Commission needs such planning information to enable better regulation. However, the smaller companies are exempt from the proposed regulations because of their size and the cost associated with compliance with the proposed regulations. The water companies that fall under the proposed regulations have planning staffs and must answer to shareholders for deficiencies in their systems.

   With that goal in mind, the cost associated with reporting requirements is not justified. Given the limited resources of the Commission, the money would be better spent focusing on the small troubled water companies that are exempt from the proposed regulations. The Commission already has in place several task forces and working groups that are examining the plight of the troubled water companies.

   Based on the discussion above, we shall terminate the rulemaking in this docket. Accordingly, under 66 Pa.C.S. §§ 308, 501, 504, 523 and 1501, and the Commonwealth Document Law (45 P. S. § 1201, et seq.) and regulations promulgated thereunder at 1 Pa. Code §§ 7.1--7.4, we find that the IRP regulations at 52 Pa. Code § 65.21 are not warranted and are rejected; Therefore,

   It Is Ordered:

   1.  That the rulemaking proceeding at this docket number is hereby terminated.

   2.  That this Order shall be published in the Pennsylvania Bulletin.

   3.  That a copy of this Order shall be served upon the Office of Consumer Advocate, the Department of Environmental Protection, the Delaware and Susquehanna River Basin Commissions, the Office of Small Business Advocate, the Office of Trial Staff, the Pennsylvania Emergency Management Agency, the Department of Community Affairs, all jurisdictional Class A water utilities, and all parties who submitted comments to the advance notice of proposed rulemaking.

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

   5.  Alternate formats of this document are available to persons with disabilities and may be obtained by contracting Shirley M. Leming, Regulatory Coordinator, Law Bureau, at (717) 772-4597 or through AT&T Relay Center at 1 (800) 654-5988. The contact persons are Stanley E. Brown, Assistant Counsel, Law Bureau, (717) 783-3968, and Thomas Heck, Bureau of CEEP, (717) 783-1985.

   6.  That the docket at L-00930077 is closed.


[Pa.B. Doc. No. 96-243. Filed for public inspection February 23, 1996, 9:00 a.m.]

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