State Regulatory Relations

NARUC Hosts Successful Winter Meetings

Despite the unprecedented winter storms in Washington, D.C., NARUC successfully held its Winter Meetings Feb. 14–17.

The Committee on Water met Monday, Feb. 15, and NAWC members were well represented. Speakers included:

• Chuck Firlotte, CEO, Aquarion Water Company, and president, NAWC, participated on a panel, “Ratemaking Decisions in these Troubled Economic Times – Perspectives from Wall Street, a Consumer Advocate and the Water Industry.”
• Eric Thornburg, president & CEO, Connecticut Water Company, participated on a panel, “Water System Sustainability – What is the Role for Economic Regulators? How Best Can Jurisdictional Water Companies Utilize the Aspen Institute Report Recommendations?”
• Dennis Ciemniecki, president, Regulated Business, United Water, participated on a panel, “Ongoing Series on Green Initiatives: United Water’s New Electronic or ‘E-Billing’.”
• Nicholas DeBenedictis, president and chairman of the board, Aqua America, participated on a panel, “Aesthetic Water Quality Issues and Small Systems: How Treatment Costs can be Met and the Role Played by Customer Education.”

The Committee on Water also met Tuesday, Feb. 16, with the following NAWC members presenting:

• Lisa Sparrow, president, Utilities Inc., provided an update on the National Drinking Water Council Advisory Group.
• Donald Correll, president & CEO, American Water, presented on, “American Water: Looking Ahead.”
• Michael Deane, executive director, NAWC, provided an update on the association.

The Water Committee passed the “Resolution Supporting EPA’s WaterSense ‘Fix-a-Leak Week’.” The resolution encourages NARUC members to participate in EPA's Fix-a-Leak Week by utilizing the materials EPA has provided and directing NARUC to issue an appropriate press release noting the EPA initiative and support for it. Click here to view a draft version of the resolution.

The Committee on Critical Infrastructure met Sunday, Feb. 14. At the committee meeting, Nicholas Santillo Jr., senior manager of operations security for American Water, presented on the panel, “Assurance of Critical Utility Service Delivery.”

The Committee on Critical Infrastructure passed the resolution, “Resolution Regarding Cybersecurity.”

The resolution recognizes the need for continued vigilance against all potential sources of cyber threats to be both prepared to prevent cyber attacks capable of disrupting utility services and to mitigate the harmful consequences of such inevitable attacks in order to protect public health, public safety and the economy. Click here to view a draft version of the resolution.

Presentations as well as the final versions of the resolutions will soon be available on the NARUC Web site.

New Co-Chairs Named for NARUC Staff Subcommittee on Water

It was announced at the Winter Meetings that Scott Woodbury, Idaho Public Utilities Commission, and Bill Richardson, South Carolina Public Service Commission, were appointed as the new co-chairs of the NARUC Staff Subcommittee on Water. Steve Klick, Pennsylvania Public Utility Commission, was named as an advisor to the committee.

Woodbury and Richardson replace outgoing Co-Chairs Sue Daly, Public Utilities Commission of Ohio, and Stacy Marie Starr-Garcia, New Mexico Public Regulation Commission.

For a listing of the subcommittee members, please click here.

IASB Issues Agenda Paper

Deloitte recently released an update on the International Accounting Standards Board (IASB or the Board) issuance of an Exposure Draft, Rate-regulated Activities, (ED) that would establish how assets and liabilities resulting from rate-regulated activities should be recognized and measured. The ED’s comment period ended Nov. 20, 2009.

According to Deloitte’s release, the IASB discussed the next steps regarding the ED on Feb. 17, 2010. The staff of IASB posted an agenda paper in advance of the meeting, which provides significant amount of information for the Board’s consideration, including a summary of the staff’s analysis of the comment letters received from respondents, a summary of the primary technical issues involved and potential paths for the future of the project.

In summary, the staff does not believe that it can meet the original project timetable (under which the final standard would have been published June 2010) because of the number and diversity of the responses to the ED, and the time required to work on other convergence projects. As a result, the staff believes they would have to re-expose a revised ED in order to issue a final standard, and they do not believe a final standard could be issued before the 4th quarter of 2011.

The staff has outlined the following potential paths for the project:

• Finalize a standalone IFRS with changes determined to be appropriate based on the comments received. This option would allow the Board to finalize the project in the shortest timeframe if changes to the ED are minimal so that re-exposure of the ED is not required.
• Proceed with the project and general concept of recognition of regulatory assets and regulatory liabilities, but review and incorporate the project as amendments to current IFRSs. This would require re-exposure of the ED.
• Alter the project to be a disclosure-only standard.
• Defer the project due to work-plan time constraints, but with a non-authoritative public comment addressing why the project has technical merits. Alternatively, the Board might consider an “interim” final standard that would permit application of the entity’s prior national GAAP until a new IFRS standard can be completed.
• Cancel the project based on consideration of the comments received and the underlying technical merits of those comments.

The agenda paper provides the Board with minimal staff recommendations, given the number of potential paths forward and the broad consequences for each potential path. Instead, the staff is asking for the Board for approval to prepare a revised project timeline and to prepare an analysis of the technical merits of whether regulatory assets and regulatory liabilities exist in accordance with current IFRSs.

Kentucky PSC Encourages Electronic Service of Documents

The Kentucky Public Service Commission, in a pending rate proceeding, has authorized Kentucky-American Water Company to depart from the PSC’s filing requirements to allow the submission and service of documents by electronic means. Adjustment of Rates of Kentucky-American Water Company, Case No. 2010-00036 (February 16, 2010). The PSC noted that the use of electronic filing and service would “permit a more efficient and thorough review of Kentucky-American’s application and should reduce the costs associated with such review for all parties.” The commission’s order provides detailed guidance on the process for filing electronically, the treatment of confidential material and the certification that electronically-transmitted documents are true and accurate copies of the originals. Interveners objecting to these procedures must show “good cause” for not participating electronically.

Delaware Supreme Court Remands Liability Case

In an opinion issued on Feb. 15, 2010, the Delaware Supreme Court held that the “filed rate doctrine,” as embodied in a tariff provision purporting to limit liability, could properly immunize a utility’s ordinary negligence from damages arising out of the failure to provide adequate water pressure for fire-fighting purposes. Broun v. United Water Delaware, 2010 Del. LEXIS 56. Quoting favorably from an earlier decision, the court noted that “the great weight of authority [is] to the effect that a contractual limitation of liability on the part of a public utility for mere inadvertence is not unconscionable or violative of public policy.” However, the court reserved judgment on whether the filed rate doctrine could be used to shield a utility from liability for gross negligence, willful misconduct or fraud.