CHAPTER 402

FORMERLY

SENATE BILL NO. 370

AS AMENDED BY SENATE AMENDMENT NO. 1

AN ACT TO AMEND TITLES 7, 16 AND 26 OF THE DELAWARE CODE RELATING TO THE CERTIFICATION AND REGULATION OF WATER UTILITIES AND WELL PERMITS AND TO TRANSFER TO THE PUBLIC SERVICE COMMISSION THE JURISDICTION TO ISSUE CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY FOR WATER UTILITIES BEGINNING JULY 1, 2001

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE

Section 1. Amend Title 7, Chapter 60, Subchapter V, sections 6075, 6076, 6077, 6078, 6079, and 6080 by deleting those sections in their entirety.

Section 2. Amend Title 7, Chapter 60, Subchapter V, by adding a new Section 6075 to read as follows:

Ҥ 6075. Non-utility wells and permits for non-utility wells within a service territory served by a water utility under a certificate of public convenience and necessity.

(a) The Department may not withhold a permit for a potable water well within the service territory served by a water utility under a certificate of public convenience and necessity, or require an applicant for a potable water well permit in an area served by a water utility to utilize the services of the utility, unless:

(1) the Delaware Geological Survey or the Department of Health and Social Services certifies that the ground water supply is inadequate or unsuitable for the intended use for which the permit is being sought; or

(2) the water utility demonstrates to the satisfaction of the Department that it can provide service of equal or better quality at lower cost; or

(3) the permit applicant is a resident of a municipality, a county water district authority, or a recorded development where public water is available.

(b) Notwithstanding subsection (a)(2) and (3) above, following the issuance of a certificate of public convenience and necessity to a water utility, the Department shall not withhold a potable water well permit from any person seeking to construct or extend a well on a farm, farmland or the lands of any existing mobile home community, or an addition, modification, or extension of that mobile home community, which as of April 11, 2000 self supplied potable water under existing permits in an area served by a water utility, nor shall it require that the person utilize the services of the utility. However, this subsection shall not authorize or require the issuance of a potable well permit that would enable a person or entity to act as a water utility without a duly issued certificate of public convenience and necessity.

(c) Notwithstanding any other provision of this section, following the issuance of a certificate of public convenience and necessity to a water utility, the Department shall not withhold a non-potable water well permit from any person seeking to construct or extend a non-potable water well in an area serviced by a water utility, subject to the provisions of subsection (d) of this section.

(d) Following the issuance of a non-potable water well permit in an area for which a certificate of public convenience and necessity has been issued, the Secretary shall send a copy of the permit, with conditions, to the water utility providing water to that area. This notification requirement shall not apply to permits issued for monitor, observation, recovery and de-watering wells. All non-potable water well permits issued in such an area shall include the following conditions:

(1) Water taken from the well is not to be used for human consumption; and

(2) The well shall not, at anytime, be interconnected with any portion of any building’s plumbing and/or any water utility’s service connection; and

(3) Representatives of the Secretary and the water utility that services the certificated area may inspect the well at any reasonable time to insure that there are not interconnections; and

(4) That the permit is subject to revocation upon any violation of its permit conditions, and upon revocation, the Secretary shall order that the well will be abandoned.

(e) The Secretary may enforce this section under § 6005 of this Title. Violations of this section may be sanctioned under the provisions of §§ 6005 and 6013 of this Title.”

Section 3. Amend Title 7, Chapter 60, Subchapter V, by adding a new Section 6076 to read as follows:

Ҥ6076. Transfer of jurisdiction for certificates of public convenience and necessity for water utilities to the Public Service Commission.

On and after July 1, 2001, the Department and Secretary shall no longer have jurisdiction to issue certificates of public convenience and necessity to water utilities. On such date, the jurisdiction to issue certificates of public convenience and necessity shall be vested in the Public Service Commission. On such date, the Public Service Commission shall also be vested with the jurisdiction, to the extent described in Chapter 1 of Title 26, to issue, suspend, and revoke certificates issued to water utilities. The process of reviewing requests for certificates, however, shall include coordination and cooperation by the Commission with the Department of Natural Resources and Environmental Control and the Division of Public Health.”

.Section 4. Amend Title 16, Chapter 1, Section 122(3)(c) by deleting the present subparagraph 6 therein in its entirety and replacing it with the following new subparagraph 6:

“6. Should any public water system serving more than 500 service connections within the State fail, without good cause, to meet water quality standards pursuant to this section for a period of time greater than seven consecutive days, or should the public water system have a history of a recurring problem, the Secretary shall file a report with the Public Service Commission detailing such failures or such history of a recurring problem. The Public Service Commission may utilize the report as cause to review the water system’s ability to provide adequate service under its present certificate of public convenience and necessity and may also use such report as a factor in considering any application by the water system for any further certificate. In addition, for water systems operated by public utilities which are subject to the jurisdiction of the Public Service Commission under § 203C of Title 26, the Commission may utilize such report as cause to review the appropriate rates to be charged by the utility in light of the quality of service being provided.”

Section 5. Amend Title 26, Chapter 1, Subchapter II, Section 202 by deleting subsection (d) in its entirety, and further by deleting subsections (a) and (b) thereof in their entirety and replacing them with the following new subsections (a) and (b):

“(a) Except insofar as may be necessary to implement §§ 203A and 203B of this Title regarding the establishment and administration of retail electric service territories, and except as may be necessary to implement § 203C of this Title regarding the issuance of certificates of public convenience and necessity for water utilities, and the review authorized under § 122 of Chapter 1 of Title 16, the Commission shall not have any supervision or regulation over any public utility, or over the rates, property, property rights, equipment, facilities or franchises of any public utility, that is municipally-owned or over any municipal electric company formed pursuant to Chapter 13 of Title 22.

(b) Except as may be necessary to implement §203C of this Title regarding the issuance of certificates of public convenience and necessity for water utilities, and the review authorized under § 122 of Chapter 1 of Title 16, the Commission shall not have any jurisdiction over any public utility, water district, or water authority created and operated pursuant to Title 9 and Title 16.”

Section 6. Amend Title 26, Chapter 1, Subchapter II, by adding a new section 203C to read as follows:

Ҥ 203C. Certificates of public convenience and necessity for water utilities.

(a) No person or entity (including municipalities, governmental agencies, and water authorities and districts created under Title 9 or Title 16) shall begin the business of a water utility nor shall any existing water utility begin any extension or expansion of its business or operations without having first obtained from the Commission a certificate that the present or future public convenience and necessity requires, or will be served by, the operation of such business or the proposed extension or expansion.

(b) This section shall not be construed to require any water utility holding an existing certificate of public convenience and necessity to secure an additional certificate from the Commission for existing operations nor shall this section be construed to require an additional certificate for the extension or expansion of operations within a service territory for which a certificate has previously been granted.

(c) An application for a certificate of public convenience and necessity to begin, extend or expand the business of a water utility beyond the territory covered by any existing certificate shall be in writing, shall be in such form as determined by the Commission and shall contain the information specified in subsection (d) or (e) below.

(d) The Commission shall issue a certificate of public convenience and necessity if the applicant therefore has submitted, together with the application, the following:

(1) evidence that all landowners of the proposed territory have been notified by certified mail, or its equivalent, of the filing of the application, such evidence consisting of (i) a list provided by the United States Postal Service, or the alternate delivery service, of those to whom notice was sent and (ii) copies of materials returned to sender; and

(2) one of the following:

a. evidence that the water in the proposed service area does not meet the regulations governing drinking water standards of the Department of Health and Social Services for human consumption; or

b. evidence that the supply is insufficient to meet the projected demand.

(e) The Commission shall issue a certificate of public convenience and necessity if the applicant therefore has submitted, together with the application, the following:

(1) evidence that all landowners of the proposed territory have been notified by certified mail, or its equivalent, of the filing of the application, such evidence consisting of (i) a list provided by the United States Postal Service, or the alternate delivery service, of those to whom notice was sent and (ii) copies of all materials returned to sender; and one of the following:

a. a signed service agreement with the developer of a proposed subdivision or development, which subdivision or development has been duly approved by the respective county government; or

b. a petition requesting such service signed by a majority of the landowners of the proposed territory to be served; or

c. a duly certified copy of a resolution from the governing body of a county or municipality requesting the applicant to provide service to the proposed territory to be served; and,

(2) In the case of a new water utility, evidence that it possesses the financial, operational, and managerial capacity to comply with all state and federal safe drinking water requirements and that it has, or will procure, adequate supplies of water to meet demand, even in drought conditions, by maintaining supply sufficient to meet existing and reasonably anticipated future peak monthly demands; and,

(3) Certification by the applicant that any proposed extension of service will satisfy the provisions of 26 Del. C. Section 403.

(f) Notwithstanding any other provision of this section, a certificate of public convenience and necessity to begin, extend or expand the business or operations of a water utility will not be granted if the Commission finds that the applying water utility is unwilling or unable to provide safe, adequate and reliable water service to existing customers, or is currently subject to a Commission finding that the utility is unwilling or unable to provide safe, adequate and reliable water service to existing customers.

(g) (1) An applicant for a certificate of public convenience and necessity shall be deemed in compliance with the notification requirement set forth in paragraphs (d)(1) and (e) (1) of this section with respect to condominium units, as defined in the Delaware Unit Property Act, Chapter 22, Title 25 of the Delaware Code, upon providing certification signed by an authorized officer of the condominium association that (i) the officer of the condominium association is properly authorized to sign the petition for water service, and (ii) all unit owners have been provided notice of the application. A copy of the notice provided to unit owners shall accompany the certification.

(2) The Commission may establish alternative means of demonstrating compliance with the notification requirement set forth in this section, including verification that notification has been delivered to the land owners of the proposed territory to be served, subject to a finding that the appropriate internet accessible technology creating a record that the notification has been sent and the status of its receipt is employed by the United States Postal Service, and after soliciting input on the use of such technology from water utilities.

(h) (1) The Commission shall act on an application for a certificate of public convenience and necessity within ninety days of the submission of a completed application. For good cause shown, and if it finds that the public interest would be served, the Commission may extend the date of its action on an application for an additional period not to exceed 30 days

(2) Any proceedings involving certificates of public convenience and necessity shall be conducted in accordance with the procedures set forth in 29 Del. C.  Ch. 101, subchapter III.

(i) For applications submitted pursuant to subsection (e) of this section, no certificate of public convenience and necessity shall be issued where a majority of the landowners of the proposed territory to be served object to the issuance thereof. Any landowner whose property, or any part thereof, is located within the proposed territory to be served shall be permitted to opt-out of inclusion in the territory prior to the issuance of a certificate of public convenience and necessity to a water utility applying to serve that territory.

(j) For purposes of this section, the phrase ‘land owners of the proposed territory to be served’ shall refer solely to those persons having fee ownership of the affected parcel of real property within the proposed territory to be served (as reflected by appropriate tax or land record documents) at the time that the application for a certificate of public convenience and necessity is submitted by the applicant to the Commission for consideration, provided however, that with respect to condominium units, as defined in the Delaware Unit Property Act, Chapter 22, Title 25 of the Delaware Code, this phrase shall mean the governing body or authorized officers of any condominium association with authority to act on behalf of unit owners, unless the underlying real property on which such condominium units have been built has been leased, directly or indirectly, to unit owners and the underlying real property owner retains the power to bind the unit owners.

(k) The Commission may undertake to suspend or revoke for good cause a certificate of public convenience and necessity held by a water utility. Good cause shall consist of:

(1) A finding made by the Commission of material non-compliance by the holder of the Certificate with any provisions of Titles 7, 16 or 26 of the Delaware Code dealing with obtaining water or providing water and water services to customers, or any order or rule of the Commission relating to the same; and,

(2) The presence of such additional factors as deemed necessary by the Commission as outlined in subsection (l) of this section.

(l) Prior to July 1, 2001, the Commission shall establish rules for the revocation of a certificate of public convenience and necessity held by a water utility. Such regulations shall outline the factors, in addition to those outlined in subsection (k) of this section, which must be present for a finding of good cause for revocation of a certificate. Such additional factors shall include, but not be limited to, the following:

(1) A finding by the Commission that, to the extent practicable, service to customers will remain uninterrupted under an alternative water utility or a designated third party capable of providing adequate water service; and,

(2) To the extent practicable, the Commission should attempt to identify methods to mitigate any financial consequences to customers served by the utility subject to a revocation.

(m) The power to revoke a certificate of public convenience and necessity granted by this section shall not apply to a certificate held by a municipally-owned water utility or by a water district or water authority created and operated under Titles 9 and 16. In the case of water utilities that are public utilities subject to the jurisdiction of the Commission, the Commission shall have the authority to assess penalties under § 217 of this Chapter.”

Section 7. Amend Title 26, Subchapter III, Section 302, by adding, after the current text, the following:

“If a water utility is not, pursuant to 16 Del. C. § 122(3)(c), under review concerning its water system’s ability to provide adequate service to its customers under its present certificates of public convenience and necessity or subject to a review by the Commission of the appropriate rates to be charged by the water utility in light of the quality of service being provided to its customers, the Commission will include in the utility’s rate base, treat as used and useful utility plant and, accordingly, allow to be fully recovered in the utility’s rates without imputation of revenues, all costs which are incurred by the water utility, in the exercise of its good faith business judgment, in constructing facilities (including without limitation supply, treatment and transmission facilities) to serve the needs of existing customers or of persons who are reasonably anticipated by the water utility to be its customers within three years from the date used by the Commission to recognize rate base in the rate proceeding. The number of customers reasonably anticipated to be added within that three year period will consist of customer projections which are relied on by the utility and are generated by professional engineers or planners, governmental or regulatory agencies, officials or authorities, or the water utility itself, and which are not arbitrary and capricious. If the water utility does not, by the end of the three year period after the date used by the Commission to recognize rate base in the rate proceeding, reach at least 75% of the total number of customers originally anticipated to be served by the facilities, the Commission may only then require the water utility to impute revenues and then only to the extent of the number of customers it originally anticipated to be served by the facilities but who have not, as of the end of the three year period, been added.”

Section 8. Amend Title 16, Chapter 1, section 403(d), by deleting subsection (d) in its entirety and replacing it with the following new subsection (d):

“(d) The appropriate agency shall report any such finding that a water company has failed to materially meet the water pressure standards of subsection (a) or (b) of this section or any order issued pursuant to subsection (c) of this section to the Public Service Commission in accordance with the Commission’s authority to grant a water utility a certificate of public convenience and necessity to expand or extend its service territory.”

Section 9. An application for a certificate of public convenience and necessity, filed under the provisions of 7 Del. C. §§ 6075-6080 and pending before the Secretary of the Department of Natural Resources and Environmental Control on July 1, 2001, shall be transferred to the Public Service Commission and shall thereafter be reviewed and considered by that Commission under the provisions herein enacted.

Section 10. Sections 1 through 6 and Sections 8 and 9 shall become effective July 1, 2001.

Section 11. Section 7 shall become effective September 1, 2000.

Approved July 06, 2000