Virginia Law

Small Water or Sewer Public Utility Act

This chapter may be cited as the "Small Water or Sewer Public Utility Act."

1986, c. 323.

As used in this chapter:

"Commission" shall mean the "State Corporation Commission."

"Service" shall mean any product or commodity furnished by a small water or sewer utility, as well as its equipment, apparatus, appliances and facilities devoted to the functions in which that utility is engaged to the use and accommodation of the public.

1986, c. 323.

This chapter shall apply to every certificated water or sewer public utility company or water and sewer public utility company (i) with gross annual operating revenues of less than one million dollars or (ii) that is owned by the property owners' association of the subdivision served by the public utility.

In case of a company with gross annual revenues of $500,000 or more, (i) the Commission may suspend a proposed increase in rates for a period not exceeding 150 days from the date of the filing of the proposed rate increase and (ii) notwithstanding any other provision of this chapter, such company shall be subject to Chapter 4 (§ 56-76 et seq.) of Title 56.

1986, c. 323; 1993, c. 369; 1997, c. 143.

A small water or sewer utility shall be required to furnish reasonably adequate services and facilities, subject to the regulation of the Commission. The charges made by any small water or sewer utility for any service rendered shall be (i) uniform as to all persons or corporations using such service under like conditions and (ii) nondiscriminatory, reasonable and just. Every charge for service found to be otherwise shall be unlawful. Reasonable and just charges for service within the meaning of this section shall be the lowest charges as shall produce sufficient revenues to pay all lawful and necessary expenses incident to:

1. The operation of the system, including maintenance costs, operating charges, and interest charges on bonds or other obligations;

2. The providing for the liquidation of bonds or other evidence of indebtedness and the attraction of capital;

3. The providing of adequate funds to be used as working capital, as well as reasonable reserves and funds for making replacements, which may be escrowed and used only as working capital if the Commission so directs as a result of a proceeding conducted pursuant to § 56-265.13:6;

4. The providing for the payment of taxes that may be assessed against the small water or sewer utility or its property; and

5. Compensation of owners of the utility for their capital or property invested in the system, if any, and for their time and other resources expended in the operation of the system not otherwise recovered under subdivisions 1 through 4 of this section.

1986, c. 323.

A. A small water or sewer utility shall make a copy of its current rates, charges, fees, rules and regulations available for public inspection during regular business office hours in its designated business office where bills can be paid.

B. Unless a small water or sewer utility notifies in writing all of its customers of any changes in its rates, charges, fees, rules and regulations at least forty-five days in advance of any change in any one of them, the utility shall not make any such changes. A copy of such notification shall be forwarded to the Commission at the same time as provided to the customers. The notice to the customers shall identify the nature of the change, the effective date of the change, and in the case of changes in rates, fees, and charges, shall identify the new rates, fees, and charges.

1986, c. 323; 1994, c. 313.

A. Upon application to the Commission by at least 25 percent of all customers affected by a rate change or by 250 affected customers, whichever number is lesser, or by the small water or sewer utility itself, or by the Commission, upon its own motion, a hearing shall be held after at least 30 days' notice to the small water or sewer utility and to its customers. The Commission may order such improvements or changes in service, measurements, practices, acts, rates, charges, fees, and rules and regulations of such utility as are just and reasonable.

When a hearing is ordered, the Commission shall have the authority to suspend such rates, charges, fees, and rules and regulations for no more than 60 days or to declare them to be interim, or both. Interim rates, fees, and charges shall be subject to refund with interest until such time as the Commission has made its final determination in the proceeding. Upon completion of the hearing and decision, the Commission may order such public utility to refund, with interest at a rate set by the Commission, the portion of such rates, charges, or fees found not justified by its decision.

B. A small water or sewer utility shall not implement an increase in the utility's rates or charges more than once within any 12-month period. This limitation shall not prohibit applications for increases in rates or charges pursuant to § 56-245.

C. If the change in rates, fees, and charges results in an increase of 50 percent or greater of the small water or sewer utility's annual revenues, the small water or sewer utility shall file the financial data required by the Commission's rules under this chapter simultaneously with providing notice of such change as prescribed by subsection B of § 56-265.13:5, and, if a hearing is ordered, the Commission shall expedite the hearing on the change in rates, fees, and charges. The Commission shall also direct that the funds produced by the increase in rates, fees, and charges shall be held in escrow by the small water or sewer utility until the Commission has rendered its decision, at which time the funds held in escrow shall either be released to the small water or sewer utility or refunded to its customers. The Commission may, however, allow the funds held in escrow to be used as necessary to comply with environmental or health laws or regulations or to allow the small water or sewer utility to provide adequate service to its customers.

1986, c. 323; 1990, cc. 410, 431; 1994, c. 313; 1996, c. 15; 2003, c. 385.

A. The Commission may, either upon petition of two-thirds of the affected customers or upon petition of its staff or upon a petition of the Board of Health, appoint a receiver to operate a small water or sewer utility which is unable or unwilling to provide adequate service to its customers. The utility shall be deemed to be unable or unwilling to provide adequate service if the Commission finds, after notice to the utility and the Department of Health and hearing, that:

1. The utility has failed to supply water or sewer service to a majority of the consumers for five days or more during the preceding three months for reasons within the control of the water and sewer utility; or

2. The Department of Health has certified that the utility has not met Department standards regarding the provision of an adequate quality and quantity of public drinking water and the Department of Health has found that the utility is unwilling to take action to meet these standards; or

3. The utility is grossly mismanaged; or

4. The utility has failed to comply with an order of the Commission to provide adequate service to the customers.

Upon appointment, the receiver shall take possession of the assets of the utility and operate them in the best interests of the customers. Control of and responsibility for the utility shall remain in the receiver until the utility can, in the best interests of customers, be returned to the original owners, transferred to new owners, or liquidated, whichever the Commission may determine to be in the public interest.

B. The provisions of §§ 8.01-583 through 8.01-590 shall apply mutatis mutandis. The receiver shall be empowered to make application to the Commission for temporary and permanent rate increases and changes in the utility's rules and regulations.

C. If the Commission determines that the utility's actions that caused it to be placed under the control and responsibility of the receiver, under this section, were due to intentional misappropriation or wrongful diversion of the assets or income of such utility or to other willful misconduct by any director, officer, or manager of the utility, it may require such director, officer, or manager to make restitution to the utility. In addition to the foregoing, any such director, officer, manager, or affiliate that commits such misappropriation or wrongful diversion or fails, neglects, or refuses to obey an order, rule, direction, or requirement of the Commission to make restitution to the utility shall be subject to a civil penalty of no more than $500 for each offense, and each day of such conduct shall constitute a separate offense.

1994, c. 311.

A. Every small water or sewer utility subject to this chapter shall be subject only to the following provisions: §§ 56-234.4, 56-236, 56-239, 56-245, 56-245.1, 56-246, 56-247.1 through 56-248, 56-249 through 56-249.2, 56-250, 56-254, 56-256 through 56-265, and Chapters 1 (§ 56-1 et seq.), 2 (§ 56-49 et seq.), 5 (§ 56-88 et seq.) and 10.1 (§ 56-265.1 et seq.) of Title 56. Small water or sewer utilities shall not be subject to Chapters 3 (§ 56-55 et seq.) and 4 (§ 56-76 et seq.) of Title 56.

B. The Commission is authorized to promulgate any rules necessary to implement this chapter.

1986, c. 323; 1992, c. 376; 1994, c. 313; 1996, c. 48.