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In re Joint Petition With Green Island Water Co.

Decided: December 31, 1980.

IN THE MATTER OF THE JOINT PETITION WITH THE GREEN ISLAND WATER COMPANY AND TOMS RIVER WATER COMPANY


On appeal from the Board of Public Utilities.

Michels, Ard and Furman.

Per Curiam

The Board of Public Utilities (hereinafter BPU) by decision and order allowed the dissolution of Green Island Water Company (Green Island), its acquisition by Toms River Water Company (Toms River) and the amortization of the $30,000 "acquisition adjustment" over a ten year period by including the unamortized balance in Toms River's rate base.

Green Island and Toms River had jointly petitioned BPU to determine the monetary value of Green Island's rate base as the purchase price for its acquisition by Toms River, and to grant

authority to Toms River to include such purchase price in its own rate base for rate-making purposes. Without a hearing BPU found that Green Island had a zero rate base and that its outstanding debts amounted to $29,640. It fixed $30,000 as the "fair purchase price" and provided an "incentive" to Toms River to acquire Green Island by allowing the $30,000 to be included in the rate base and to be amortized over ten years, even though in effect it constituted a payment for outstanding debts and not capital expenditures.

At the time of the BPU decision and order Green Island, a privately-owned utility subject to BPU jurisdiction (N.J.S.A. 48:2-13), was serving 315 customers; Toms River, also a privately-owned utility subject to BPU jurisdiction, was serving approximately 25,000 customers. Green Island's water sources were polluted and its wells capped. It supplied water which it purchased from Toms River. Its mains were undersized, in violation of Department of Environmental Protection regulations. It failed to provide fire protection.

According to conclusions of BPU's Bureau of Engineering Operations, Green Island's deteriorated and obsolete system was worthless, and its replacement would entail a capital investment of several hundred thousand dollars.

In its decision and order BPU set forth:

The Board wishes to note and to emphasize that its treatment of the Green Island Water Company in this matter is to be viewed as an extraordinary occurrence. This Order is not to be viewed as a signal to other small water utilities in the State to allow a deterioration of their service in the hope that larger and more capable utilities in their immediate areas will take them over under the same terms as allowed by the Board in this matter. All such acquisitions of small water utilities by other water utilities will be considered by the Board on a case-by-case basis and the most stringent and searching investigation will be had in each and every matter.

The Board will continue to attempt to implement innovative treatments in its handling of small water utility problems in this State. The Board wants to commend the parties in this proceeding for their efforts. The cooperation and dedication of all involved has aided in resolving a problem that has faced this Board for many years.

The Public Advocate urges on appeal that the purchase price should not have been added to Toms ...


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