WEBVTT 00:00:01.018 --> 00:00:03.399 (item:11:55098, Chairwoman Jackson calls merits hearing to order) This meeting of the Public Utility Commission of Texas 00:00:03.410 --> 00:00:05.759 will come to order. For the Merits Hearing in Docket 00:00:05.960 --> 00:00:10.130 No. 55098, which has been duly posted with the Secretary 00:00:10.140 --> 00:00:14.409 of the State of Texas for June 15, 2023. I will now 00:00:14.419 --> 00:00:18.309 turn it over to our Commission ALJ for the Administration 00:00:18.318 --> 00:00:20.708 of the Hearing. (item:11:55098, Commission ALJ lays out docket on petition for appointing a temporary manager for Channel Oaks WS) Good morning Commissioners. I call 00:00:20.719 --> 00:00:24.620 to order Docket No. 55098, which is Commission Staff's 00:00:24.629 --> 00:00:27.010 petition for an order appointing a temporary manager 00:00:27.019 --> 00:00:30.699 for Channel Oaks Water System LLC. Continuing until 00:00:30.708 --> 00:00:33.259 the Commission orders otherwise or until a receiver 00:00:33.270 --> 00:00:36.340 is appointed by the appropriate court. My name is Katie 00:00:36.348 --> 00:00:38.149 Marks, assisting the Commissioners. And the purpose 00:00:38.158 --> 00:00:40.840 of this Hearing is to determine whether a temporary 00:00:40.848 --> 00:00:44.139 manager should be appointed. We had a prehearing conference 00:00:44.149 --> 00:00:46.950 yesterday and I admitted the 14 exhibits prefiled 00:00:46.959 --> 00:00:51.770 by Commission Staff on June 5, 2023. I also admitted 00:00:51.779 --> 00:00:55.298 the 3 exhibits for Channel Oak, Oaks which are the 00:00:55.310 --> 00:00:59.060 3 items filed by Channel Oaks on June 6, 2023. 00:00:59.560 --> 00:01:02.000 At this time, we'll take the appearances of the party 00:01:02.009 --> 00:01:03.709 starting with Commission Staff. 00:01:06.370 --> 00:01:07.088 Good morning. I'm sorry. 00:01:09.939 --> 00:01:12.349 (item:11:55098, Introductions from Mildred Anaele, Commission Staff & Pauline Jones, Channel Oaks WS) Good morning, Mildred Anaele for Commission Staff. 00:01:14.359 --> 00:01:17.849 For the utility? Oh, I'm sorry. Pauline Jones, uh 00:01:17.859 --> 00:01:22.138 Channel Oaks Water System. Um, we will move into opening 00:01:22.150 --> 00:01:26.650 statements, Commission Staff. Good morning here. Um, 00:01:26.659 --> 00:01:29.269 (item:11:55098, Opening statement from Mildred Anaele, Commission Staff) we are here this morning to address Staff's petition 00:01:29.278 --> 00:01:32.719 to appoint a temporary manager to Channel Oaks Water 00:01:32.730 --> 00:01:38.370 System, LLC. Uh, and I will refer to them as COWS moving 00:01:38.379 --> 00:01:42.540 forward. Um, on May 2, 2023, the Commission issued an 00:01:42.549 --> 00:01:46.879 order modifying the emergency uh, emergency order issued 00:01:46.888 --> 00:01:50.129 by the Executive Director in this matter. On February 00:01:50.138 --> 00:01:55.459 23, 2023, ordering COWS to file a sworn affidavit 00:01:55.469 --> 00:02:01.069 stating the, stating the identity of an individual who 00:02:01.079 --> 00:02:05.528 has the authority to manage COWS. COWS has failed to 00:02:05.540 --> 00:02:08.490 file such an affidavit or otherwise identify a manager 00:02:08.500 --> 00:02:14.569 of COWS. Additionally on May 25, 2023, the Commission 00:02:14.580 --> 00:02:16.990 requested the Attorney General's Office bring suit 00:02:17.000 --> 00:02:20.610 to appoint a receiver. Because of COWS's failure to comply 00:02:20.618 --> 00:02:23.569 with the Commission's order, requiring it to identify 00:02:23.580 --> 00:02:27.088 a manager. And because the process to appoint a receiver 00:02:27.099 --> 00:02:30.550 may likely be a lengthy one. Commission Staff is requesting 00:02:30.558 --> 00:02:33.860 that the Commission issue an order identifying CSWR 00:02:33.868 --> 00:02:37.770 Texas as temporary manager of Channel Oaks. For a 00:02:37.778 --> 00:02:41.300 time period identified by the Commission or until a 00:02:41.308 --> 00:02:44.669 receiver is appointed. To ensure the continued operation 00:02:44.679 --> 00:02:47.710 of the utility and provision of continuous and adequate 00:02:47.719 --> 00:02:49.479 service to the customers. 00:02:51.250 --> 00:02:54.308 (item:11:55098, ALJ Marks swears in Pauline Jones, with Channel Oaks WS) Uh, Miss Jones. Yesterday, we discussed your capacity 00:02:54.319 --> 00:02:56.538 with the water system and your role as a representative 00:02:56.550 --> 00:02:59.028 here today. Given your position, I'm gonna go ahead 00:02:59.038 --> 00:03:01.899 and swear you in before we move into your opening statement. 00:03:02.159 --> 00:03:04.179 Um, if you'll raise your right hand and state your 00:03:04.189 --> 00:03:06.949 name for the record, please. Pauline Jones. Do you swear or 00:03:06.960 --> 00:03:09.169 affirm to tell the truth, the whole truth and nothing 00:03:09.179 --> 00:03:11.689 but the truth in this proceeding? I do. Thank you. You 00:03:11.699 --> 00:03:13.740 may proceed with an opening statement, if you have one. 00:03:14.050 --> 00:03:20.210 (item:11:55098, Opening Statement from Pauline Jones, Channel Oaks WS) Um my only statement is that um, uh. On May 11, uh 00:03:20.219 --> 00:03:23.449 Mary Maxey with the Channel Oaks Water System, uh the 00:03:23.460 --> 00:03:27.069 managing member of the LLC. Filed an affidavit indicating 00:03:27.080 --> 00:03:29.439 that Channel Oaks Water System had agreed to work with 00:03:29.449 --> 00:03:33.330 PUC. To secure an entity qualified to take over the 00:03:33.338 --> 00:03:37.649 Channel Oaks Water System. Um that Pauline Jones, Keith 00:03:37.659 --> 00:03:42.008 Jones and Aaron Johnson, a Class B licensed operator. 00:03:42.020 --> 00:03:45.069 Have been identified as the new operators responsible 00:03:45.080 --> 00:03:49.599 for managing the utility. Um on May 16th, the PUC 00:03:49.610 --> 00:03:53.349 came out and discussed with property owners from Channel 00:03:53.360 --> 00:03:57.219 Oak subdivision. The um procedures that would be required 00:03:57.229 --> 00:04:01.118 to complete a sale, transfer, merger of the CCN. And 00:04:01.129 --> 00:04:04.240 explained that it could take up to a year to complete 00:04:04.250 --> 00:04:07.969 that actual transfer over. Um we feel like that we 00:04:07.979 --> 00:04:11.419 have identified the individual responsible to manage 00:04:11.429 --> 00:04:14.538 the utility and we have not violated the Commission's 00:04:14.550 --> 00:04:18.509 final order in Docket No. 54678. 00:04:21.019 --> 00:04:24.309 The Channel Oaks Water System was never notified. That 00:04:24.319 --> 00:04:26.910 the PUC was requesting that the Attorney General 00:04:26.920 --> 00:04:29.988 bring suit against Channel Oaks Water System for the 00:04:30.000 --> 00:04:34.689 appointment of a receiver. Um I personally, Pauline 00:04:34.699 --> 00:04:38.028 Jones. Met with Phyllis Brown, who was contracted by 00:04:38.040 --> 00:04:42.369 the PUC. To ensure compliance on all billing and record 00:04:42.379 --> 00:04:45.759 keeping issues with managing the water system. Um I 00:04:45.769 --> 00:04:48.540 trained with her. I have been working with Channel 00:04:48.548 --> 00:04:53.600 Oaks Water System since October of 2021. When PGMS 00:04:53.608 --> 00:04:57.649 was managing the system. And is responsible for all 00:04:57.660 --> 00:05:00.588 of the violations that we had leading up to there, 00:05:00.869 --> 00:05:06.059 uh removal or walk away from the system. And um I have 00:05:06.069 --> 00:05:09.069 been instrumental in bringing the water system into 00:05:09.079 --> 00:05:13.069 compliance with the TCEQ, the Groundwater Commission 00:05:13.170 --> 00:05:17.028 and the PUC. Since um I took over the water 00:05:17.040 --> 00:05:22.259 system in February, February 8th of 2023. Um I have 00:05:22.269 --> 00:05:25.069 been working through the legal issues. Surrounding the 00:05:25.079 --> 00:05:29.250 Brian Maxey, DBA Channel Oaks Water System. That currently 00:05:29.259 --> 00:05:34.100 owns the CCN. And the uh max the assets, the assets 00:05:34.108 --> 00:05:37.000 from the Mac, Brian Maxey estate were not distributed 00:05:37.009 --> 00:05:40.730 properly. To the heirs or beneficiaries before closing 00:05:40.738 --> 00:05:44.689 the estate. And Channel Oaks Water System CCN and all 00:05:44.699 --> 00:05:47.209 assets of the Channel Oaks Water System. Should have 00:05:47.220 --> 00:05:50.588 been transferred out of the DBA at Brian Maxey's death. 00:05:50.939 --> 00:05:54.178 Um Mary Maxey and Carolyn Maxey have both stated that 00:05:54.189 --> 00:05:56.750 they are not the owner or the operator of the water 00:05:56.759 --> 00:06:01.088 system. And Channel Oaks Water System, LLC has been managing 00:06:01.100 --> 00:06:03.988 and operating the water system, and has been providing 00:06:04.000 --> 00:06:07.670 adequate water service to water customers. Um we are 00:06:07.678 --> 00:06:11.579 committed to continuing to work directly with the PUC. 00:06:11.588 --> 00:06:15.879 To secure an entity qualified to take over the CCN. 00:06:17.160 --> 00:06:19.528 Thank you. Uh we'll move into the witnesses. (item:11:55098, Commission Staff and Channel Oaks WS state they do not have any witnesses) Commission 00:06:19.540 --> 00:06:22.588 Staff, do you have any witnesses? No, we do not. Ms. 00:06:22.600 --> 00:06:24.309 Jones, do you have any additional witnesses? No, I 00:06:24.319 --> 00:06:27.009 do not. Thank you. Commissioners, do you have any questions? 00:06:27.500 --> 00:06:29.829 Yes. I, I have a few questions. Oh, sorry. You said 00:06:33.730 --> 00:06:37.579 Commissioners. Oh, I apologize. (item:11:55098, Commissioner McAdam's has a question for Commission Staff) As to the issue of notice um are, are they 00:06:37.588 --> 00:06:40.220 required to be noticed? No. Okay. 00:06:43.129 --> 00:06:45.399 There will be (inaudible) one of the petition to appoint 00:06:45.410 --> 00:06:48.738 a reserve as follow. I understand. Yeah. Okay. 00:06:51.170 --> 00:06:55.220 Any other questions, Commissioners? I don't think so. Um, we'll move 00:06:55.230 --> 00:06:56.428 into closing statements. 00:07:07.319 --> 00:07:12.009 (item:11:55098, Closing statement from Mildred Anaele with Commission Staff) Once again, um Commissioners. We are requesting that 00:07:12.019 --> 00:07:14.858 the Commission issue an order to appoint TSWR as 00:07:14.869 --> 00:07:18.298 temporary manager. Until the receivership process is 00:07:18.309 --> 00:07:23.139 concluded at the appropriate court. Uh, the evidence 00:07:23.149 --> 00:07:26.608 on the record, shows that COWS failed to comply with 00:07:26.619 --> 00:07:32.399 the Commission issued order uh, in Docket 54678. Not 00:07:32.410 --> 00:07:37.449 once but twice. Um which require COWS to identify 00:07:37.459 --> 00:07:41.639 the appropriate individual. Um they state that they 00:07:41.649 --> 00:07:44.858 did, but they did not specifically say who was to manage. 00:07:44.869 --> 00:07:47.778 They listed people, but they did not list who was the 00:07:47.790 --> 00:07:49.369 manager. Um 00:07:51.019 --> 00:07:54.119 because of the continued ambiguity, uh ambiguity. 00:07:56.709 --> 00:08:01.449 Um that remains as to who is in charge um of ensuring 00:08:01.459 --> 00:08:06.178 the as who is in. Sorry. Let me restart that. No problem. 00:08:06.790 --> 00:08:10.379 Um because of the continued ambiguity that remains 00:08:10.389 --> 00:08:13.678 as to who is in charge. Of ensuring the continued operation 00:08:13.689 --> 00:08:16.439 of the utility and the provision of continuous and 00:08:16.449 --> 00:08:20.639 adequate service to the customers. And because CSR 00:08:21.009 --> 00:08:25.858 uh, CSWR stands willing and able to temporarily manage 00:08:25.869 --> 00:08:29.980 COWS, and for the benefit of the customers in general. 00:08:30.040 --> 00:08:32.158 Commission Staff requests that the Commission issue 00:08:32.168 --> 00:08:36.210 an order appointing CSWR as temporary manager of COWS, 00:08:36.219 --> 00:08:40.619 effective today, June 15, 2023. Continuing until the 00:08:40.629 --> 00:08:43.000 Commission orders otherwise or until a receiver is 00:08:43.009 --> 00:08:46.558 appointed. Thank you. Miss Jones, do you have a closing 00:08:46.570 --> 00:08:52.259 statement? Yes. (item:11:55098, Closing statement from Pauline Jones with Channel Oaks WS) Um my only statement here. Is that um 00:08:52.580 --> 00:08:58.200 in February, CSWR we spoke with Sean Nichols. And 00:08:58.210 --> 00:09:02.570 uh tried to have him take over the temporary management 00:09:02.580 --> 00:09:07.029 and operation of COWS. Um when, when he contacted Ms. 00:09:07.038 --> 00:09:10.489 Maxey back in February. Um they could have saved the 00:09:10.500 --> 00:09:15.668 homeowners and myself a lot of time and energy. But 00:09:15.678 --> 00:09:19.080 they were not willing to provide a licensed water operator 00:09:19.090 --> 00:09:22.678 or take over the management, until they owned the utility. 00:09:22.928 --> 00:09:27.298 It is now in the statement from the uh that, that's 00:09:27.308 --> 00:09:33.489 in the docket. That Mr. uh Todd Thomas intends to purchase 00:09:33.500 --> 00:09:37.019 Channel Oaks through a STM proceeding. With the 00:09:37.029 --> 00:09:41.369 PUC, um he made that statement on June 1, in the 00:09:41.379 --> 00:09:45.418 docket filings. And my question is this if, if he 00:09:45.428 --> 00:09:49.058 is interested in purchasing and doing a sale transfer 00:09:49.070 --> 00:09:54.739 man, uh merger. Then why not allow us the opportunity 00:09:54.798 --> 00:09:58.788 as the water system owner of the CCN for the last 20 00:09:58.798 --> 00:10:01.869 years. Although the PUC states that we don't own 00:10:01.879 --> 00:10:06.538 it because it's in Brian Maxey's name, instead of the 00:10:06.548 --> 00:10:12.320 LLC. Why not negotiate with us and let us. We're more 00:10:12.330 --> 00:10:16.369 than happy to do a sale transfer, merger and sign it 00:10:16.379 --> 00:10:20.178 over to CSWR. But I don't want to give it 00:10:20.190 --> 00:10:23.830 away. And if it's gonna go into receivership, then 00:10:24.104 --> 00:10:27.994 so be it. But I don't feel I need a temporary manager, 00:10:28.004 --> 00:10:33.234 to come in here and take over my business and run it. 00:10:33.244 --> 00:10:36.394 And for the property owners, I am providing that service 00:10:36.404 --> 00:10:39.303 for the property owners. I have been billing, I have 00:10:39.484 --> 00:10:43.283 put the TCEQ charges. I have done everything that 00:10:43.293 --> 00:10:46.710 the Public Utility Commission has asked me to do. And 00:10:46.719 --> 00:10:50.359 I don't see any reason. If they take it over with receivership, 00:10:50.369 --> 00:10:53.239 then so be it. We'll turn it over. But I don't see 00:10:53.250 --> 00:10:57.308 any reason to authorize them to come in and take over. 00:10:57.320 --> 00:11:01.229 And do what meter readings and billing? We're already 00:11:01.239 --> 00:11:06.080 doing that. So that's my statement. Thank you. If there's 00:11:06.090 --> 00:11:09.440 nothing else from anyone? One question of Staff. Has 00:11:09.450 --> 00:11:12.889 service meaningfully uh improved since this entire 00:11:12.899 --> 00:11:17.908 process began? I would like to ask um Celia (inaudible) to 00:11:17.918 --> 00:11:22.570 also step up. Great. But she'll have more information. 00:11:37.719 --> 00:11:39.840 Good morning. Will you please state your name for the 00:11:39.849 --> 00:11:42.869 record? Celia Eves for Commission Staff Division 00:11:42.879 --> 00:11:45.200 of Utility Outreach. I'm gonna swear you in as 00:11:45.210 --> 00:11:47.710 a witness. Uh, please raise your right hand. Do you 00:11:47.719 --> 00:11:49.668 swear, affirm to tell the truth, the whole truth and 00:11:49.678 --> 00:11:52.379 nothing but the truth in this proceeding? I do. Thank 00:11:52.389 --> 00:11:52.570 you. 00:11:54.969 --> 00:11:59.019 (item:11:55098, Commissioner McAdams' follow-up question to Commission Staff) Has the question is, has service meaningfully improved 00:11:59.029 --> 00:12:03.639 since the PUC process was initiated? (item:11:55098, Celia Eves with Commission Staff) Since the PUC 00:12:03.649 --> 00:12:06.719 process, uh since we've uh have been working with 00:12:06.729 --> 00:12:09.340 the utility and stuff. You know we, we have sent out 00:12:09.349 --> 00:12:13.149 since Ms. Jones stated uh assistance contract. There are pending 00:12:13.158 --> 00:12:16.960 violations that we are aware of that are still pending 00:12:16.969 --> 00:12:19.538 with the Texas Commission on Environmental Quality. 00:12:19.960 --> 00:12:23.979 Um that I believe are are still relevant issues at 00:12:23.989 --> 00:12:27.519 hand with regards to the continuous um an adequate 00:12:27.529 --> 00:12:30.269 service related to providing service to the customers. 00:12:30.428 --> 00:12:34.190 Um Ms. Jones stated that we, the division of utility 00:12:34.200 --> 00:12:38.229 outreach as well as our public engagement, Mike Hogan and 00:12:38.239 --> 00:12:40.308 stuff. We actually attended a meeting, held a meeting 00:12:40.320 --> 00:12:45.690 with the customers of Channel Oaks Water. With regards 00:12:45.700 --> 00:12:50.788 to um a lot of, I guess concerns from the customers. 00:12:50.798 --> 00:12:55.519 About reliability, about understanding, about not understanding 00:12:55.529 --> 00:12:59.808 what was going on. But as well as issues with regards 00:12:59.820 --> 00:13:04.450 to how billing was occurring. As well as you know, 00:13:04.460 --> 00:13:07.849 who they needed, who was going to respond to specific 00:13:07.859 --> 00:13:10.210 requests for service. So there's a lot of, I guess 00:13:10.219 --> 00:13:13.428 customer concern with that regard. We actually attended 00:13:13.440 --> 00:13:16.899 that meeting. To try to make sure that we would clarify the 00:13:17.038 --> 00:13:20.219 PUC's jurisdiction. With regards to trying to work to 00:13:20.229 --> 00:13:22.558 ensure that there's continuous and adequate service. 00:13:22.706 --> 00:13:27.136 With regards to the fact that because there is an entity 00:13:27.145 --> 00:13:30.256 or someone out there. Representing that, you know, they 00:13:30.267 --> 00:13:32.557 are providing service for compensation. There's still 00:13:32.567 --> 00:13:37.395 the issue that this entity does not hold the CCN to 00:13:37.405 --> 00:13:42.846 provide service. And as the record will show, what's 00:13:42.855 --> 00:13:47.866 In the docket and stuff related to Docket 55098. 00:13:47.876 --> 00:13:51.342 And it's actually Item No. 2, Exhibit 2 and 00:13:51.354 --> 00:13:53.813 3. If you look at those exhibits, I think this 00:13:53.822 --> 00:13:57.494 is part of the concern. With regards to trying to determine 00:13:57.504 --> 00:14:00.893 what is going on and how we actually reach meaningful 00:14:00.903 --> 00:14:04.523 resolution for the customers. And ensure that there's 00:14:04.533 --> 00:14:07.212 continuous and adequate service. There's been a lot 00:14:07.222 --> 00:14:10.783 of unfortunately, in the emails was very lengthy email 00:14:10.793 --> 00:14:14.673 chain that's in that exhibit. With regards to who the 00:14:14.683 --> 00:14:19.431 owner is. The Maxey family has had an ongoing dispute 00:14:19.440 --> 00:14:23.541 about who actually is responsible for the utility. And 00:14:23.551 --> 00:14:26.990 who actually has the authority to potentially sell 00:14:27.000 --> 00:14:30.759 the assets of this utility. So the Division of Utility 00:14:30.769 --> 00:14:33.830 Outreach, we have reached out to numerous neighboring 00:14:33.841 --> 00:14:37.230 utilities. With regards to either doing temporary management, 00:14:37.240 --> 00:14:40.931 interest in the utility. But the question remains that 00:14:40.996 --> 00:14:44.648 even if we were to identify someone, potentially. There's 00:14:44.658 --> 00:14:47.278 still the issue of who would be authorized to actually 00:14:47.288 --> 00:14:49.807 transfer the assets. And because of that, you know 00:14:49.817 --> 00:14:53.376 there is concern. That are we going to have someone 00:14:53.388 --> 00:14:57.006 in place again to even address the transfer of the 00:14:57.018 --> 00:15:00.687 utility. But also address even some of the violations 00:15:00.697 --> 00:15:03.736 that are, that are related to what might be considered 00:15:03.746 --> 00:15:07.673 significant infrastructure improvements. For instance and again, 00:15:07.683 --> 00:15:13.183 this is not PUC, it's a Texas TCEQ compliance violation 00:15:13.195 --> 00:15:16.783 with regards to well capacity. So there are improvements, 00:15:16.793 --> 00:15:20.913 there are issues. With regards to whether the lines 00:15:20.923 --> 00:15:23.293 are actually, that the lines actually are not properly 00:15:23.303 --> 00:15:26.604 buried. And so there's obviously infrastructure upgrades 00:15:26.614 --> 00:15:29.575 that need to be included and conducted with this utility. 00:15:29.683 --> 00:15:32.335 So it's important to identify someone who's actually 00:15:32.344 --> 00:15:35.822 going to have the ability to actually make those infrastructures 00:15:35.831 --> 00:15:37.871 improvement. To ensure that there's going to be continuous 00:15:37.881 --> 00:15:41.721 and adequate service to these customers. But again, 00:15:41.741 --> 00:15:44.160 with regards to trying to work to find a long term 00:15:44.171 --> 00:15:47.131 solution. You know, it potentially is again, someone 00:15:47.142 --> 00:15:50.160 needs to have the authority to actually hold the CCN. 00:15:50.171 --> 00:15:53.631 To legally be charging these customers and actually 00:15:53.642 --> 00:15:56.841 have the ability to invest in the needed infrastructure 00:15:56.932 --> 00:15:59.062 to ensure this continuous inadequate service. 00:16:02.759 --> 00:16:06.190 Anything else? Thank you Judge. (item:11:55098, ALJ adjourns hearing) And we are adjourned. Thank 00:16:06.200 --> 00:16:06.440 you. 00:16:11.269 --> 00:16:11.288 (silence) 00:16:22.399 --> 00:16:22.500 (silence) 00:16:27.500 --> 00:16:31.000 (item:11:55098, Chairwoman Jackson calls to adjourn merits hearing) Merit's Hearing in Docket 55098 is hereby adjourned 00:16:31.009 --> 00:16:33.418 at 10:12am.