KATZ, KANTOR & PERKING, PLLC ATTORNEYS AT LAW FIFTH FLOOR LAW & COMMERCE BLDG. GUY W. PERKINS LEROY H. KAT2 (1017-1DD4) WAYNE L. EVANS WAYNE S. STONESTREET 307 FEDERAL STREET - NORRIS KANTOR OF COUNSEL P.O. BOX 727 BLUEFIELD, WEST VIRGINIA 24701 COLIN M. CLINE ERIC J. BUCKNER - TEL. 304d327-3551 TOLL FREE (800) Q37-3551 FACSIMILE NO. 304/325-7405 VIA HAND DELIVERY July 27,2007 Sandra Squire, Executive Secretary Public Service Commission P.O. Box 812 Charleston, WV 25323 Re: Case Nos.: 07-0009-G-42T and 07-0201-GPC Bluefield Gas Company Rule 42T Application to increase gas rates and charges and Joint Petition Dear Ms. Squire: Enclosed please find an original and twelve (12) copies of “Initial Brief of Intervenor, City of Bluefield, West Virginia” in the above-referenced consolidated cases. A copy has been served upon all parties of record. Very truly yours, Enclosures xc: Christopher L. Callas, Esquire David A. Sade, Esquire John Auville, Esquire Thomas N. Hanna, Esquire David C. Smith, Esquire John Feuchtenberger, Esquire Mark Heme
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KATZ, KANTOR & PERKING, PLLC ATTORNEYS AT LAW
FIFTH FLOOR LAW & COMMERCE BLDG. GUY W. PERKINS LEROY H. KAT2 (1017-1DD4) WAYNE L. EVANS WAYNE S. STONESTREET
307 FEDERAL STREET -
NORRIS KANTOR OF COUNSEL P.O. BOX 727
BLUEFIELD, WEST VIRGINIA 24701
COLIN M. CLINE ERIC J. BUCKNER
- TEL. 304d327-3551
TOLL FREE (800) Q37-3551
FACSIMILE NO. 304/325-7405
VIA HAND DELIVERY
July 27,2007
Sandra Squire, Executive Secretary Public Service Commission P.O. Box 812 Charleston, WV 25323
Re: Case Nos.: 07-0009-G-42T and 07-0201-GPC Bluefield Gas Company Rule 42T Application to increase gas rates and charges and Joint Petition
Dear Ms. Squire:
Enclosed please find an original and twelve (12) copies of “Initial Brief of Intervenor, City of Bluefield, West Virginia” in the above-referenced consolidated cases.
A copy has been served upon all parties of record.
Very truly yours,
Enclosures xc: Christopher L. Callas, Esquire
David A. Sade, Esquire John Auville, Esquire Thomas N. Hanna, Esquire David C. Smith, Esquire John Feuchtenberger, Esquire Mark Heme
KATZ. KANTOR & PERKINS. P.L.L.C. ATORNEYS AT LAW
l, > z: c-2 --. t $ 1 -p --..I f- :?I
!-q T zz:
PUBLIC SERVICE COMMISSION 2 c.”. CHARLESTON -.A $j
5.. ‘.’ 0 -- - OF WEST VIRGINIA
‘ , I c 3 a CASE NO.: 07-020 1 -GPC Bluefield Gas Company, a West Virginia Corporation md ANGD, LLC, a Virginia Company
n-J
Joint Petition of Bluefield Gas Company and ANGD, LLC for Consent and Approval of the Purchase of the Common Shares of Bluefield Gas Company
and
CASE NO.: 07-0009-G-42T BLUEFIELD GAS COMPANY
Rule 42T Application to Increase Gas Rates and Charges
INITIAL BRIEF OF INTERVENOR, CITY OF BLUEFIELD, WEST VIRGINIA
NOW COMES the City of Bluefield West Virginia, a municipal corporation (“City of
Bluefield”, or “City”), Intervenor in the above styled consolidated cases now pending before
the Public Service Commission of West Virginia (PSC) and files its Initial Brief. As set forth
more filly below, the City of Bluefield is opposed to the Joint Petition for Consent and
Approval of the Purchase by ANGD, LLC of the Common Stock of Bluefield Gas Company
fiom RGC Resources, Inc. The City of Bluefield believes that the proposed sale is not in the
best interest of the customers of Bluefield Gas Company (BGC) and that the proposed stock
sale would adversely affect both the City of Bluefield as franchisor BGC and several thousand
customers of BGC who reside in the City of Bluefield.
I. Introduction
The issue before the Commission is whether, upon a review of the entire record, the
proposed sale of the common stock of Bluefield Gas Company by RGC Resources, Inc., to
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KATZ. KANTOR & PERKIMS. P.L.L.C. ATTORNEYS AT LAW
ANGD, LLC, would “adversely affect the public in this state” and more particularly whether
said proposed transaction would adversely affect the City of Bluefield and nearly 4,000
customers of Bluefield Gas who reside in the City of Bluefield. 8 24-2-12 of the Weest
Virginia Code. If the proposed sale is adverse to the interests of the City of Bluefield and to
current BGC customers such that RGC Resources, Inc., should be required to continue
operating BGC, a second issue arises, namely whether the increase of revenue of $323,853 as
recommended by Staff and CAD together with the associated rates and charges are just and
reasonable. It is the position of the City of Bluefield that the proposed revenue increase
should be limited to $176,242.
A. Procedural History
On January 4, 2007, BGC filed an application to increase its rates and charges for
providing natural gas service in Mercer County by approximately 4.6% annually. By
Commission Order entered January 22, 2007, the matter was referred for to the ALJ for
decision to be rendered on or before September 4, 2007. The Commission required a Staff
report by June 13,2007.
The matter was set for Hearing on June 26, 2007, and BGC was required to publish
notice of the hearing.
On February 20, 2007, BGC and ANGD, LLC, jointly petitioned the Commission for
consent and approval of the purchase of the cornmon stock of BGC by ANGD, LLC. On
April 23,2007, Staff moved to consolidate Case No.: 07-009-G-42T and 07-0201-G-PC. No
party objected to the
consolidated. A Public
consolidation
Hearing was
. By Order
scheduled for
2
, I + - - < issued May 10, $007y~~the;cases were
June 26, 2007, and‘ Evident&ry $@ring I .
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KATZ. KANTOR & PERKINS. P.L.L.C. ATTORNEYS AT LAW
was set for July 6, 2007, to address issues related both to the requested rate increase and the
stock transfer.
B. June 26,2007 Public Hearing
On June 26, 2007, a Public Hearing on the consolidated rate case and stock transfer
case was held in the Municipal Board Room at the Bluefield City Hall Complex. Numerous
persons testified at the hearing. Many had questions about the origin, ownership and
operation of ANGD, LLC. Almost all those who testified were concerned about the proposed
rate increase and about the ability of the many gas customers of BGC on fixed incomes to
afford the proposed increase, as well as any hture rate increases.
C. July 6,2007, Evidentiary Hearing
An Evidentiary Hearing in this matter was held in the Municipal Board Room located
at the Bluefield City Hall Complex on July 6, 2007. The Honorable Keith A. George,
Administrative Law Judge presided at the hearing. Testimony was offered by John B.
Williamson, 111, President and CEO of RGC Resources, Inc., Dale Lee, Vice President and
Corporate Secretary of BGC, J. David Anderson, Assistant Secretary and Assistant Treasurer,
BGC, John Ebert, CEO and Principal in ANGD, LLC, Randall Short, Utilities Financial
Analyst for the Consumer Advocate Division, Eric DeGruyter, Natural Gas Utilities Specialist
employed by the PSC, Thomas Sprinkle also of the PSC, Blaine Braithwaite, from the South
Bluefield Neighborhood Association, and Mark Henne, City Manager of Bluefield West
Virginia.
The Petitioners in Case No.: 07-0201-G-PC , Bluefield Gas Company and ANGD,
LLC, together with CAD and PSC Staff, through their respective counsel, offered as an
exhibit a Joint Stipulation and Agreement for Settlement (Revised). In said Joint Stipulation,
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KATZ. KANTOR & PERKINS. P.L.L.C. AlTORNEYS AT LAW
the Petitioners, CAD and Staff recommended approval of the stock sale and a revenue
increase of $176,242 subject to conditions set forth in the Joint Stipulation, and proposed that
the increase become effective as of the date of the closing of the transaction.
Judge George directed the parties to file Initial Briefs together with proposed findings
of fact and conclusions of law on or before Friday, July 27, 2007, with Reply Briefs to be
filed by August 3,2007.
11. Factual Background
ANGD, LLC, was formed in 2005, by John W. Ebert and William Clear. Effective
January 1 , 2006, ANGD, LLC, acquired Appalachian Natural Gas distribution company to
provide gas distribution service to approximately 300 customers in Russell, Buchanan and
Dickenson Counties in Virginia, with additional certificate/fianchise rights for Tazewell
County (except for the town of Bluefield). ANGD, LLC has 5 employees and utilizes
services of third parties to perform various functions such as distribution, construction, line
location, right of way maintenance, and other field support services. (Direct testimony of
John W. Ebert).
In February 2007, ANGD, LLC entered into a Purchase Sale Agreement with RGC
Resources, Inc., for the acquisition of the common stock in BGC, a wholly owned subsidiary
of RGC Resources, Inc. As part of said agreement, RGC Resources, Inc., will provide
support services to ANGD, LLC, for up to two (2) years after the sale. Although BGC’s
current office and local employees will be retained, accounting work, billing, collection
related work, call center and customer service will not be transitioned until three to four (3-4)
months after the proposed closing. More importantly, ANGD, LLC, will have no in-house
engineering services and will continue to rely on the Support Services Agreement for a
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KATZ. KANTOR & PERKINS. P.L.L.C. ATORNEYS AT LAW
considerably longer period of time in order to provide construction, design, bid preparation
and analysis, engineering support services, compliance reports, training, O&M, and OQ
I, WAYNE L. EVANS, counsel for the City of Bluefield, do hereby certify that a
:opy of the foregoing “Initial Brief of Intervenor, City of Bluefield, West Virginia” has been
served upon the following parties of record by Certified MaiUReturn Receipt Requested this
t he21 day of July, 2007. dl
Christopher L. Callas, Esquire John Phillip Melick, Esquire Michael A. Albert, Esquire Jackson Kelly, PLLC PO Box 553 Charleston, WV 25322-0553 Counsel for BlueJield Gas Company
David A. Sade, Esquire Consumer Advocate Division 7fh Floor, Union Building 723 Kanawha Blvd, East Charleston, WV 25301
John Auville, Esquire PSC 201 Burks Street Charleston, WV 25301
Thomas N. Hanna, Esquire (WV State Bar# 1581) PO Box 3967 Charleston, WV 25339 Counsel for ANGD, LLC
David C. Smith, Esquire Smith & Scantlebury 307 Federal Street, Suite 205 Bluefield, WV 24701