WEBVTT 00:00:07.150 --> 00:00:09.329 (item:1:ALJ Christina Denmark opens prehearing) And we'll go ahead and get started. 00:00:16.489 --> 00:00:20.969 We are on the record for Docket No. 52877 application 00:00:20.978 --> 00:00:24.208 of Vineyard Ridge Water Supply LLC for authority to 00:00:24.219 --> 00:00:27.179 change rates. My name is Christina Denmark and I'm 00:00:27.190 --> 00:00:29.500 the Administrative Law Judge assigned to this matter. 00:00:29.969 --> 00:00:32.709 This prehearing conference is being held in person 00:00:32.719 --> 00:00:35.179 in the Commissioner's Hearing room located at the William 00:00:35.189 --> 00:00:39.069 B. Travis Office Building in Austin, Texas on October 00:00:39.079 --> 00:00:45.668 25, 2023, it's now 10:30am. Under 16 Texas Administrative 00:00:45.679 --> 00:00:49.840 Code, Section 25.35(c). This prehearing conference is 00:00:49.848 --> 00:00:51.789 deemed to be the beginning of the hearing required 00:00:51.798 --> 00:00:56.679 by 16 Texas Administrative Code, Section 24.35, Subsection 00:00:56.689 --> 00:01:00.679 B2. (item:1:ALJ Christina Denmark lays out prehearing information) This prehearing conference is limited to review 00:01:00.689 --> 00:01:03.490 an affirmation of the agreement between Vineyard Ridge 00:01:03.500 --> 00:01:06.969 and the aligned Interveners filed on January 9th of 00:01:06.980 --> 00:01:11.000 2023. At this time, let's go ahead and take appearances 00:01:11.010 --> 00:01:14.989 starting with Vineyard Ridge. Good morning, Your Honor. 00:01:15.000 --> 00:01:18.569 (item:1:Les Romo, Attorney for Vineyard Ridge Water Supply) My name is Les Romo. I'm the Attorney for Vineyard 00:01:18.579 --> 00:01:21.459 Ridge Water Supply, LLC applicant. 00:01:25.010 --> 00:01:27.290 (item:1:Joe Freeland, on behalf of the aligned interveners) Good morning, Your Honor. Joe Freeland, on behalf of 00:01:27.299 --> 00:01:31.040 the aligned interveners in this case. (item:1:Andy Aus and Olivia Lu on behalf of Commission Staff) Good morning, 00:01:31.049 --> 00:01:33.219 Your Honor. Andy Aus and Olivia Lu here on behalf 00:01:33.230 --> 00:01:35.359 of Commission Staff and just a matter of housekeeping. 00:01:35.370 --> 00:01:37.659 Anthony Canals is the Lead Attorney on this case, but 00:01:37.668 --> 00:01:41.028 we are covering for him today. Okay. Is there anyone 00:01:41.040 --> 00:01:43.859 else who intends to speak at this prehearing conference? 00:01:49.308 --> 00:01:52.769 Okay. Let's push forward. (item:1:ALJ Christina Denmark lays out filed agreement) We're here today regarding 00:01:52.778 --> 00:01:55.409 the agreement filed by Vineyard Ridge on January 9 00:01:55.418 --> 00:01:59.198 of 2023. This was entered into evidence in Order No. 00:01:59.209 --> 00:02:04.079 30 filed on April 17th of 2023. The following items 00:02:04.088 --> 00:02:06.879 are not in evidence and there's no pending motion to 00:02:06.888 --> 00:02:10.169 admit evidence. There was a revised affidavit of notice 00:02:10.179 --> 00:02:13.088 to the Office of Public Utility Counsel followed by 00:02:13.099 --> 00:02:16.308 Vineyard Ridge on April 24th of 2023. It was followed 00:02:16.319 --> 00:02:18.949 after the proposed order for the Commission's consideration 00:02:18.960 --> 00:02:22.368 was filed. The joint motion for informal hearing filed 00:02:22.379 --> 00:02:24.969 by Vineyard Ridge, the aligned interveners and Commission 00:02:24.979 --> 00:02:29.629 Staff on June 30 of 2023. Commission Staff's response 00:02:29.639 --> 00:02:34.778 to Order No. 31 filed on July 7th of 2023. Commission 00:02:34.788 --> 00:02:37.569 Staff's response to Order No. 32 filed on August 00:02:37.580 --> 00:02:41.699 2nd 2023. And the affidavit and proof of mailing of 00:02:41.710 --> 00:02:44.278 prehearing conference to customers and affected parties 00:02:44.288 --> 00:02:48.719 filed by Vineyard Ridge on October 6th of 2023. (item:1:ALJ Christina Denmark asks for motion to admit items into evidence) At 00:02:48.729 --> 00:02:51.830 this time, I'll entertain a motion to admit any or 00:02:51.838 --> 00:02:57.879 all of those items into evidence. I'd so move. Any 00:02:57.889 --> 00:03:00.288 objections? No objection, Your Honor. No objection, 00:03:00.300 --> 00:03:02.588 Your Honor. All right. (item:1:Motion granted) Vineyard's motion to admit the 00:03:02.599 --> 00:03:03.710 evidence is granted. 00:03:05.868 --> 00:03:08.189 Are there any other initial matters that need to be 00:03:08.199 --> 00:03:10.808 addressed before discussing this agreement? 00:03:13.800 --> 00:03:17.460 No, Your Honor. No, Your Honor. Okay. (item:1:ALJ Christina Denmark confirms all parts affirm & approve agreement) So we're here today to 00:03:17.469 --> 00:03:20.379 discuss the agreement. Has everyone reviewed the agreement? 00:03:21.159 --> 00:03:25.379 Yes, Your Honor. Vineyard Ridge, do you affirm the 00:03:25.389 --> 00:03:26.058 agreement? 00:03:29.868 --> 00:03:33.849 Yes, Your Honor. Aligned interveners do you affirm the 00:03:33.879 --> 00:03:37.240 agreement? Yes, Your honor. And Commission Staff, are 00:03:37.250 --> 00:03:39.990 you still recommending approval of the agreement? Yes, 00:03:40.000 --> 00:03:43.169 Your Honor. Are there any objections to the agreement? 00:03:44.528 --> 00:03:44.868 No, Your Honor. 00:03:47.419 --> 00:03:50.319 Is there any other business to discuss at this 00:03:50.379 --> 00:03:53.038 prehearing conference? Your Honor, (item:1:Joe Freeland on charged rates) it has been brought 00:03:53.050 --> 00:03:55.469 to my attention that the utility has been charging 00:03:55.479 --> 00:03:59.949 the agreed to rates in September and October of this 00:03:59.960 --> 00:04:02.258 year. Which would be contrary, would actually be a 00:04:02.270 --> 00:04:05.058 breach of the settlement agreement. I think we would 00:04:05.069 --> 00:04:08.669 ask that along with the order approving the settlement 00:04:08.679 --> 00:04:11.349 agreement. The Commission create a compliance docket. 00:04:11.360 --> 00:04:15.629 To ensure that if there are in fact, were over collections 00:04:15.639 --> 00:04:17.649 during that time period. That those over collections 00:04:17.660 --> 00:04:19.778 are refunded to the ratepayers. 00:04:22.699 --> 00:04:25.720 (item:1:Les Romo with opposition) And Your Honor, we of course would be in direct opposition 00:04:25.730 --> 00:04:26.139 to that. 00:04:28.019 --> 00:04:31.079 So plain and clear, 00:04:32.709 --> 00:04:36.829 the record shows my client filed this rate case application 00:04:37.129 --> 00:04:45.798 November 22, 2021. A system designed to keep a small 00:04:45.809 --> 00:04:49.600 water utility from increasing its rates for over two 00:04:49.608 --> 00:04:55.199 years or at the two year mark is definitely a broken 00:04:55.209 --> 00:04:59.199 system. We entered into the settlement agreement in 00:04:59.209 --> 00:05:03.809 good faith. It was filed in January of this year. We're 00:05:03.819 --> 00:05:04.959 at the end of October. 00:05:07.439 --> 00:05:10.439 Since the effective date under the application was 00:05:10.449 --> 00:05:12.540 August 1, 2022. 00:05:14.678 --> 00:05:16.449 The uh, excuse me. 00:05:19.600 --> 00:05:26.869 The and the ALJ, Administrative Law Judge, did suspend the 00:05:26.879 --> 00:05:34.439 rates for 265 days pursuant to the PUC Rule 24.33. 00:05:35.230 --> 00:05:40.309 That 265 days ran out in April about April 20, 21 00:05:40.319 --> 00:05:41.889 of 2023. 00:05:43.608 --> 00:05:50.048 The 24.33 rules state that the Commission did not make 00:05:50.059 --> 00:05:52.298 a final determination on the proposed rate before the 00:05:52.309 --> 00:05:56.079 expiration of the suspended period. Described in Sections 00:05:56.088 --> 00:05:59.910 A and D. The proposed rates will be considered approved. 00:06:01.559 --> 00:06:04.178 So technically, my client could have been charging 00:06:04.509 --> 00:06:09.420 the rates under its application which exceed the rates 00:06:09.428 --> 00:06:10.738 under the settlement agreement. 00:06:12.399 --> 00:06:17.720 Now, what my client due to its financial straits has 00:06:17.730 --> 00:06:21.290 been just barely getting by. As we all know, we've 00:06:21.298 --> 00:06:23.209 just been through one of the worst droughts in the 00:06:23.220 --> 00:06:28.500 last 20 years. Yet customers were using up to 40,000 00:06:28.509 --> 00:06:33.178 gallons of water a month per household. Basically running 00:06:33.189 --> 00:06:34.420 my client into bankruptcy. 00:06:36.449 --> 00:06:39.369 (item:1:Les Romo opposing all motions on refunds) We would oppose any motion that would say that there 00:06:39.379 --> 00:06:43.000 is a requirement for a refund of any of the amounts 00:06:43.009 --> 00:06:46.889 charged under the settlement agreement. Since my client 00:06:46.899 --> 00:06:49.548 technically could have charged the amount under the 00:06:49.559 --> 00:06:54.778 approved rate. Which is approved by operation of rule 00:06:54.790 --> 00:06:59.000 and law because of Texas Water Code under uh 00:06:59.009 --> 00:07:05.269 Chapter 13.1871 and 1872, both state, the same thing. 00:07:06.100 --> 00:07:09.819 Commission fails to act 265 days pass, the rates are 00:07:09.829 --> 00:07:14.819 approved. So we would go forward agreeing to the settlement 00:07:14.928 --> 00:07:19.660 agreement as standing subject to the ability of my 00:07:19.670 --> 00:07:22.519 client to either continue to charge the settlement 00:07:22.528 --> 00:07:28.000 rate or we will allow that for a period of time. We 00:07:28.009 --> 00:07:30.238 don't want to have the Commission taking another six 00:07:30.250 --> 00:07:33.709 months before it acts. So my client needs some type 00:07:33.720 --> 00:07:36.798 of financial assurance. Otherwise, he's gonna be forced 00:07:36.809 --> 00:07:39.108 to close the doors and nobody's gonna have any water. 00:07:40.129 --> 00:07:41.129 And that's where we stand. 00:07:43.290 --> 00:07:45.949 (item:1:Joe Freeland on revised tariff rates) May I respond Your Honor? If you look at the settlement 00:07:45.959 --> 00:07:49.480 agreement, Paragraph 2 states I think clearly unequivocally. 00:07:49.488 --> 00:07:53.100 That the utility will not seek an effective date for 00:07:53.108 --> 00:07:55.720 the new rates. That being this revised tariff rates 00:07:55.730 --> 00:07:59.750 which were filed back in January or February of this 00:07:59.759 --> 00:08:02.678 year. Will not seek an effective date for the new rates 00:08:02.689 --> 00:08:05.160 earlier than the first day of the billing cycle following 00:08:05.170 --> 00:08:07.720 the Commission's order. Approving the application as 00:08:07.730 --> 00:08:11.170 amended here. And so to the extent that the rates were 00:08:11.178 --> 00:08:14.699 suspended before through the application to amend the 00:08:14.709 --> 00:08:19.230 rate case. The utility agreed to extend, well agreed 00:08:19.238 --> 00:08:21.298 to set a new effective date and that effective date 00:08:21.309 --> 00:08:25.129 being the first billing period after the Commission 00:08:25.139 --> 00:08:28.108 approves the settlement agreement. That's what the 00:08:28.119 --> 00:08:32.580 agreement says, Your Honor. And if we, if the utility 00:08:32.590 --> 00:08:34.668 had wanted to amend the agreement before we got here 00:08:34.678 --> 00:08:37.168 today, they could have approached my clients, we could 00:08:37.178 --> 00:08:39.200 have discussed it and maybe we could have come to some 00:08:39.210 --> 00:08:42.129 resolution on that. The utility didn't, the utility 00:08:42.139 --> 00:08:43.830 simply started charging your rates. 00:08:45.359 --> 00:08:48.678 (item:1:Les Romo on settlement agreement) And what Mr. Freeland conveniently omitted is the fact 00:08:48.690 --> 00:08:51.460 that he and I have been in discussion since my clients 00:08:51.469 --> 00:08:55.548 started charging under the settlement agreement at 00:08:55.558 --> 00:08:59.139 least half a dozen times. So his representation that 00:08:59.149 --> 00:09:03.418 we did no negotiation is absolutely false. Secondly, 00:09:03.548 --> 00:09:06.038 I'm sorry. I think in the settlement agreement that 00:09:06.048 --> 00:09:11.879 says that we were disavowed of charging the settlement 00:09:11.889 --> 00:09:18.969 rates. The effective rates under the application again 00:09:19.590 --> 00:09:22.629 are not new rates. That was the original application. 00:09:23.690 --> 00:09:27.109 My client in a good faith tried to work out a settlement 00:09:27.119 --> 00:09:30.798 with the customers. But when he's sitting in a position 00:09:30.808 --> 00:09:35.200 of waiting from January to October for the Commission 00:09:35.210 --> 00:09:38.129 to even consider acting on a settlement agreements 00:09:38.139 --> 00:09:41.908 and sitting there for almost 10 months. Financially 00:09:41.918 --> 00:09:44.359 he's in a situation where either the settlement agreement 00:09:44.369 --> 00:09:48.219 is good and we can go forward from here. Or the settlement 00:09:48.229 --> 00:09:51.580 agreement is not good, if as Mr. Freeland claims it 00:09:51.590 --> 00:09:54.158 was quote breached, which we disagree. But if it is 00:09:54.168 --> 00:09:56.979 breached, then we'll go back to the original applied 00:09:56.989 --> 00:10:02.700 rates. Rely upon the Commission's own rules 33. Um 00:10:02.759 --> 00:10:07.538 I mean excuse me, 34.33. And we will charge the rates 00:10:07.548 --> 00:10:10.690 under the original application. There's no give on 00:10:10.700 --> 00:10:14.639 the part of the customers at this stage. Which puts 00:10:14.649 --> 00:10:18.099 my client in a financial back against the wall situation. 00:10:20.830 --> 00:10:24.808 (item:1:Joe Freeland on enforcing provisions of settlement agreement) May I respond Your Honor? Briefly, we I agree with 00:10:24.820 --> 00:10:28.190 Mr. Romo. We did have discussions after the utility 00:10:28.200 --> 00:10:30.830 started charging the new rate. Not before the utility 00:10:30.840 --> 00:10:32.090 started charging the new rate. 00:10:34.048 --> 00:10:36.428 We, we still think the settlement agreement is good. 00:10:36.440 --> 00:10:38.109 We should go forward with the settlement agreement. 00:10:38.119 --> 00:10:41.099 We just want the provisions of the settlement agreement 00:10:41.109 --> 00:10:43.830 enforced by the Commission through a settle through 00:10:44.070 --> 00:10:47.950 a compliance docket. Which often happens following approval 00:10:47.960 --> 00:10:51.460 of rates. Um I, you know this, this 00:10:54.048 --> 00:10:56.529 representations that the utility is going to go out 00:10:56.538 --> 00:11:01.029 of business. Quit serving is all no, there's no facts 00:11:01.038 --> 00:11:03.989 or evidence in the record to support that Your Honor. 00:11:04.080 --> 00:11:06.849 I would also point out that there is a pending docket 00:11:06.859 --> 00:11:10.298 for sales transfer and merger of this utility to a 00:11:10.308 --> 00:11:14.019 much larger solvent utility. So I'm not exactly sure 00:11:14.389 --> 00:11:17.869 what dire straits the utilities owner is in today. 00:11:17.879 --> 00:11:18.869 Given that fact. 00:11:20.678 --> 00:11:24.139 (item:1:Les Romo on the STM) If I may briefly address that. The purchaser is very 00:11:24.149 --> 00:11:26.658 much concerned by the fact that these customers have 00:11:26.668 --> 00:11:30.710 fought tooth and nail to prevent a very modest increase 00:11:30.719 --> 00:11:35.700 after over 15 years of no increase whatsoever. So the 00:11:35.710 --> 00:11:39.349 result of what happens in this decision will have a 00:11:39.359 --> 00:11:43.580 direct impact on the sales, transfer, merger. So there 00:11:43.590 --> 00:11:47.178 is the question of my client's financial viability. 00:11:47.450 --> 00:11:50.210 And I represent, I'm talking straight from the president 00:11:50.538 --> 00:11:54.729 and, or the managing partner of the, LLC. My, my 00:11:54.739 --> 00:11:59.379 clients managing partner. 00:12:00.899 --> 00:12:03.960 We will agree to go forward on the settlement agreement. 00:12:04.288 --> 00:12:07.690 We're in opposition to the compliance docket and leave 00:12:07.700 --> 00:12:11.349 that to your discretion. (item:1:Joe Freeland speaks on clients reliance on settlement agreement) I, I one last thing, Your 00:12:11.359 --> 00:12:14.509 Honor. And that is if, if in fact, the utility was 00:12:14.519 --> 00:12:17.788 going to take the position that, um, the settlement 00:12:17.798 --> 00:12:20.119 agreement was off. I was going to point out the fact 00:12:20.129 --> 00:12:23.538 that my clients took affirmative steps in reliance 00:12:23.548 --> 00:12:26.158 on the settlement agreement and withdrew their opposition 00:12:26.168 --> 00:12:30.000 to the rate. Uh, and so withdrew from the rate case 00:12:30.389 --> 00:12:33.719 based on the provisions of the settlement agreement. 00:12:33.729 --> 00:12:38.279 So this would be a hard one to unwrap if we're gonna 00:12:38.710 --> 00:12:40.849 if we're going to find the settlement agreement breached 00:12:40.859 --> 00:12:44.788 and no longer applicable. Thank you, Your Honor. (item:1:Les Romo on Water Code) If 00:12:44.798 --> 00:12:47.029 I may just briefly, Your Honor. I don't see anything 00:12:47.038 --> 00:12:50.529 in the rules or in the Water Code that relate to your 00:12:50.538 --> 00:12:53.229 client's position on whether they quote, withdrew their 00:12:53.239 --> 00:12:56.408 opposition or not. There's nothing in there about that 00:12:56.418 --> 00:13:00.678 It just says there's 265 days. It was suspended for 00:13:00.690 --> 00:13:04.609 that period of time and the Commission did not act 00:13:04.830 --> 00:13:08.058 there was no hearing held. Therefore, the rates as 00:13:08.070 --> 00:13:10.960 applied are the applicable rates as we stand right 00:13:10.969 --> 00:13:14.908 now. Unless my client agrees to proceed with the settlement 00:13:14.918 --> 00:13:15.298 agreement. 00:13:17.379 --> 00:13:20.889 And do we agree when the change in the rates occur 00:13:20.899 --> 00:13:23.538 you said September and October. 00:13:25.288 --> 00:13:28.369 Do you know? I'm sorry, Your Honor. 00:13:30.558 --> 00:13:34.058 (item:1:ALJ Christina Denmark confirming when rates were charged) The change that with the rates that changed, that they 00:13:34.070 --> 00:13:38.158 were charged. Do you like, was it September and Octobe? 00:13:38.168 --> 00:13:41.700 I'm just trying to get you guys. (item:1:Les Romo verifies dates rates were charged) My client proceeded 00:13:41.710 --> 00:13:46.840 for the, for September and October 2023 he charged 00:13:46.849 --> 00:13:50.369 under the race under the settlement agreement. And if 00:13:50.379 --> 00:13:54.070 the, if the customers are in support of the settlement 00:13:54.080 --> 00:13:56.649 agreement. They should have no problem with that arrangement. 00:13:58.700 --> 00:14:00.349 Okay, I'll take it under advisement. 00:14:02.690 --> 00:14:03.210 Uh 00:14:09.200 --> 00:14:13.340 (item:1:ALJ Christina Denmark confirms if any other business to discuss) Is there any other business to discuss? Not from the 00:14:13.349 --> 00:14:16.739 aligned interveners, Your Honor. Nothing from Staff 00:14:16.750 --> 00:14:19.019 Your Honor. Did you want to weigh in at this point? 00:14:19.558 --> 00:14:22.899 (item:1:Andy Aus on Staff not opposed to a compliance docket opened) Well, if we're talking about, you know, the prehearing 00:14:22.908 --> 00:14:25.340 conference day to a limited review and affirmation 00:14:25.349 --> 00:14:28.599 of the agreement. I think what the issue from my point 00:14:28.609 --> 00:14:31.928 of view is more of the implementation of the set agreement. 00:14:32.099 --> 00:14:34.700 For the record, Staff would not be opposed to a compliance 00:14:34.710 --> 00:14:36.889 docket being opened up for this case. 00:14:47.548 --> 00:14:52.119 Anything else, any other business prehearing conference? 00:14:53.009 --> 00:14:55.369 All right. (item:1:ALJ Christina Denmark adjourns prehearing conference) The prehearing conference is now adjourned.