In an email, Tracy Edmonds Herz announced management of Timberline Utility will be turned over to the Canaan Valley Public Service District (CVPSD). “Regretfully, we find that the Canaan Valley Public Service District v. Timberline Utility case has become a distraction to our love of clean water, community service, winter sports, the economy of Canaan Valley and our neighbor. We apologize that we were unable to find a full-time Class 2 operator sufficient to lift the administrative boil water notice more quickly for you all,” the email read.
CVPSD is not currently managing Timberline Utilities. The pending case is between Timberline Utility and West Virginia Public Service Commission (WVPSC), not CVPSD.
A statutory process must be followed for a receiver of a private utility to be created. An administrative law judge will issue an order to the WVPSC after the December 13 hearing. WVPSC will make decision on how it wishes to proceed. If the WVPSC wishes to pursue receivership, then they will file a suit in circuit court.
On Friday, December 7 Timberline Utilities’ representing attorney Richard Neely filed a motion to cancel the hearing scheduled for December 13. “Upon advice of counsel, Richard Neely, the Respondent simply confesses gross negligence as the only remaining issue that might be tried at the hearing,” the motion reads.
“Further, Counsel Richard Neely has instructed Mr. Herz and all other officers of the Respondent that they should take the Fifth Amendment with regard to all questions except their names and addresses,” the motion continues.
Tracy’s December 4 email continued, “This will be an orderly, seamless transition. We now turn the administration of our utility to the colleagues at the Canaan Valley Public Service District under the terms set forth by the State of West Virginia. The BWN will be lifted at which point the Canaan Valley Public Service District takes receivership.”
“We’re still in litigation on this. They just can’t turn it over like that, there’s a process for that,” Bob Metzger, CVPSD board member, said. “We will have to see what goes on at the hearing.”
Four days before the announcement, the West Virginia Public Service Commission (WVPSC) released a copy of the Final Joint Staff Memorandum on the matter. The memorandum was addressed to Director Ingrid Ferrell from Leslie Anderson, supervising attorney for the WVPSC.
“Staff recommends that the Administrative Law Judge conclude that Timberline Utilities is unable or unwilling to adequately serve its customers or has been actually or effectively abandoned by its owners, or that its management is grossly and willfully inefficient, irresponsible or unresponsive to the needs of its customers,” the memorandum read.
The memorandum stated that Timberline Utilities failed to collect payment on water and sewer services provided “to affiliates with arrearages increasing from $134,966 ordered to be repaid in 2016 complaint cases to $225,067 as of October 31, 2018 (an increase of $90,101).”
It continued, Timberline Utility “failed to collect the ordered repayment for improper affiliate transfers of cash, while increasing the amount transferred from Timberline Utilities to affiliate entities since January 2015 from $180,212 to $319,253 as of October 31, 2018.”
The memorandum also concluded that Timberline Utility participated in distribution in excess of retained earnings to shareholders, directly paid from Timberline Utilities funds for transactions covered under the affiliated management agreement.
Utility mismanagement was also cited due to their lack of timely filing of the 2017 Public Service Commission annual report, lack of filing of 2017 state and federal tax returns, delayed response to staff data requests, and a failure to satisfy multiple years of state and federal tax liabilities.
Office malpractices were also cited, including an attempt to operate management offices without electric services for an extended period, inconsistent office hours, and checks returned for insufficient funds, and unavailability to customers and staff. The utility was also cited for failure to provide accurate usage amounts on bills and to timely issue bills to its customers.
The memorandum recommended that stuff pursue the administrative law judge to issue an order recommending that the WVPSC seek to put Timberline Utility into receivership.
The West Virginia Public Service Commission will hold a hearing on whether Timberline Utilities will operate under receivership. The hearing will be held in the Pine Room, Canaan Valley Resort & Conference Center, Route 32 North, Canaan Valley State Park, Davis, West Virginia, at 9:30 am on December 13, 2018.