Thomas, Long, Niesen & Kennard Law

Highlights: PA PUC Public Session of September 15, 2006

September 15, 2006

Note: The public meeting calendar and agendas may be viewed at http://www.puc.state.pa.us/general/public_meeting.aspx

At the September 15, 2006, Public Meeting of the Pennsylvania Public Utility Commission (“Commission”), the Commissioners adopted Staff’s recommendations for action by a vote of 5-0 on all items listed on the Main Agenda and Carry-In Agenda, except as reflected herein below under the respective Commission agenda headings. Review of particular items addressed by the Commissioners at this Public Meeting which may be of interest to our clients and our firm are also addressed under the respective Commission agenda headings below. Any relevant motions and statements are attached to the original of this Session Memo filed in the Public Meeting Agenda and Session Memo binder. The next regular Public Meeting is scheduled for Thursday, September 28, 2006 at 10:00 a.m. The minutes of the Public Meeting of July 20, 2006 were unanimously approved without modification.

Bureau of Transportation and Safety

All matters approved as submitted.

Bureau of Consumer Services

BCS-0010R*, Final Investigatory Order/Proposed Rulemaking. Staff recommends that the Commission adopt the proposed Order, to be published in the Pennsylvania Bulletin. Postponed by Vice Chairman Cawley until Public Meeting of October 19, 2006.

Office of Special Assistants

OSA-0221, Application of the City of Chester. On June 27, 2005, the City filed the above application requesting approval to alter the at-grade crossing. The Recommended Decision of ALJ Jones was issued on May 22, 2006, recommending that the Application be approved, in part, and denied in part, and denied in part; A-00121915. Staff recommends that the Commission adopt the proposed Opinion and Order which grants and/or denies the Parties’ Exceptions and adopts the ALJ’s Recommended Decision as modified. Motion of Chairman Holland to adopt the staff recommendation except he disagrees with the entire closing of Morton Avenue crossing during repairs and agrees with ALJ that a hearing on maintenance responsibility should be held. Commissioners Pizzingrilli and Fitzpatrick concur in result only. Vote of 5-0 with no further discussion.

OSA-0240*, Buffalo Valley Telephone Company. Supplement No. 54 to Tariff Pa. PUC No. 7 and Supplement No. 8 to Tariff Pa. PUC No. 8 - Annual Price Stability Index/Service Price Index. Petition for Reconsideration of the Commission’s June 23, 2006 Opinion and Order; R-00061375, P-00981428F1000. Staff recommends that the Commission deny the Petition, consistent with the proposed Opinion and Order. Postponed by Commissioner Pizzingrilli until Public Meeting of September 28, 2006.

OSA-0241*, Conestoga Telephone & Telegraph Company. Supplement No. 206 to Tariff Pa. PUC No. 10 and Supplement No. 7 to Tariff Pa. PUC No. 11 - Annual Price Stability Index/Service Price Index. Petition for Reconsideration of the Commission’s June 23, 2006 Opinion and Order; R-00061376, P-00981429F1000. Staff recommends that the Commission deny the Petition, consistent with the proposed Opinion and Order. Postponed by Commissioner Pizzingrilli until Public Meeting of September 28, 2006.

OSA-0242R*, Denver & Ephrata Telephone & Telegraph Company. Supplement No. 251 to Tariff Pa. PUC No. 15 and Supplement No. 10 to Tariff PA. PUC No. 16 - Annual Price Stability Index/Service Price Index. On July 10, 2006, D&E filed a Petition for Reconsideration of the Commission’s June 23, 2006 Opinion and Order. On July 20, 2006, Verizon PA filed its response as Amicus Curiae and on July 31, 2006, D&E filed a Petition to Strike or Dismiss Verizon’s response; R-00061377, P-00981430F1000. Staff recommends that the Commission deny the Petition and the Motion to Strike or Dismiss Amicus Curiae Response of Verizon, consistent with the proposed Opinion and Order. Postponed by Commissioner Pizzingrilli until Public Meeting of September 28, 2006.

OSA-0243*, The North-Eastern Pennsylvania Telephone Company and NEP Cellcorp, Inc.. Joint Petition filed on August 1, 2006 for Approval of an Interconnection Agreement. No comments have been received; A-311419F7013. Staff recommends that the Commission adopt the proposed Opinion and Order granting the Joint Petition. Vote of 5-0 with no discussion.

OSA-0275*, Windstream Pennsylvania, Inc., f/k/a Alltel Pennsylvania, Inc., Supplement No. 3 to Windstream Pennsylvania Inc. Tariff Pa. PUC No. 6 - Annual Price Stability Index/Service Price Index. Petition for Clarification by the Commission’s August 17, 2006 Order, filed by OSBA, on August 29, 2006; R-00061461, P00981423F1000. Staff recommends that the Commission grant the Petition, consistent with the proposed Opinion and Order. Vote of 5-0 with no discussion.

OSA-0279*, Dominion Retail, Inc. and Select Energy, Inc., Refund of Assessments paid to the PA PUC. Joint Exceptions to ALJ Colwell’s July 13, 2006 Initial Decision filed by Dominion and Select; M-00061940, M-00061941. Staff recommends that the Commission adopt the proposed Order addressing the Exceptions. Postponed by Chairman Holland until Public Meeting of September 28, 2006.

Bureau of Fixed Utility Services

FUS-0865R*, Application filed May 31, 2006, by Aqua Pennsylvania, Inc., requesting approval of the acquisition by Aqua of the water system assets of Floral Estate Associates, L.P., and the right of Aqua to begin to offer, render, furnish or supply water service to the public in a portion of Jefferson Township, Lackawanna County, PA; A-210104F0073. Staff recommends that the Commission adopts the proposed Order. Vote of 5-0 with no discussion.

FUS-1357*, Securities Certificate filed August 4, 2006 by Denver & Ephrata Telephone and Telegraph Company, D&E Systems, Inc., Conestoga Telephone and Telegraph Company, and Buffalo Valley Telephone Company, in respect to their guarantee of certain credit facilities of D&E Communications, Inc.; S-00061145. Staff recommends that the Commission adopt the proposed Order registering the Securities Certificate. Vote of 5-0 with no discussion.

Combined Bureau Agenda

All matters approved as submitted (FUS recommendation adopted, OTS rejected).

Law Bureau

L-0051*, Petition to Open an Investigation into the Wire Centers of Verizon PA, Inc. and Verizon North, Inc., Assert are Non-Impaired under the FCC’s Triennial Review Remand Order of ATX Licensing, Inc., Broadview Networks, Inc., CRSI, LLC, CTC Communications Corp., Lightship Telecom, LLC, Telcove Investment, LLC, Telcove of Eastern Pennsylvania, Telcove of York, Telcove Operations, Inc., and XO Communication Services, Inc.; P-00062210. Staff recommends that the Commission adopt the proposed draft Opinion and Order denying the CLEC’s Petition to Open an Investigation. Motion of Vice Chairman Cawley to adopt staff’s recommendation and deny the CLEC’s petition and direct that the Commission’s OP-12 Forum is the proper venue to informally discuss the non-impaired status of selected Verizon and Verizon North wire centers. Vote of 5-0 with no further discussion.

L-0062*, Insuring Consistent Application of 52 Pa. Code §56.12(7) Equal Monthly Billing, Petitions for Reconsidering of the Commission’s June 2, 2006 Final Interpretive Order; <-00051925. Staff recommends that the Commission grant the Petitions, in part, consistent with the proposed Order, to be published in the Pennsylvania Bulletin. Postponed by Vice Chairman Cawley until Public Meeting of October 19, 2006.

L-0063*, Performance Metrics and Remedies - July 2006 Updates; M-00011468F0010. Staff recommends that the July 2006 updates be approved, consistent with the proposed Order. Vote of 5-0 with no discussion.

L-0064*, Certification of Rural and Non-Rural Carriers for Federal Universal Service Fund Support; M-00011530. Staff recommends that the Commission adopt the proposed Secretarial Letters certifying to the FCC and USAC that the rural ILEC’s will use all federal high-cost support provided to them for the year 2006, consistent with section 254(e) of the Telecommunications Act of 1996, and certifying that Verizon PA and Verizon North’s rural residential rates are reasonably comparable to the urban rates nationwide for purposes of section 254(b)(3) of the Telecommunications Act of 1996. Vote of 5-0 with no discussion.

Office of Administrative Law Judge

ALJ-0560*, Deborah K. Scott v. PA-American Water Company. On July 21, 2005, a complaint was filed alleging a billing dispute. On August 15, 2005, PAWC filed its answer. A hearing was held on November 1, 2005; C-20054741. Staff recommends Commission Review of ALJ Jandebeur’s Initial Decision dismissing the complaint. Postponed by Vice Chairman Cawley until Public Meeting of October 19, 2006.

ALJ-0581*, Application of Valley Run Water Company, LLC. On August 18, 2005, Valley Run filed an application for a certificate of public convenience to begin to offer, furnish or provide water service in a portion of Washington Township, Berks County. Notice of the application was published in the September 3, 2005 Pennsylvania Bulletin. A protest was filed. A Settlement Agreement was filed on February 3, 2006; A-210121. Staff recommends a Commission Review of ALJ Fordham’s Initial Decision approving the application and the Settlement Agreement. Motion of Vice Chairman Cawley that the record must show that Applicant has met the requirements of 52 Pa. Code §3.501. As such, FUS is directed to review Company business plan, compliance with county and municipal plans, applicable zoning designations and status of well permit applications. FUS is to prepare a report on its findings for Public Meeting of October 19, 2006. Vote of 5-0 with no further discussion.

ALJ-0583*, Application of Superior Water Company, Inc.. On November 7, 2005, Superior filed an application for a certificate of public convenience authorizing it to begin to offer, render, furnish or supply water service to the public in an and additional portion of Washington Township, Berks County, and in a portion or Colebrookdale Township, Berks County, Pennsylvania. The application was published in the Pennsylvania Bulletin. Protests were filed. On February 14. 2006, Superior filed an Amended Application limiting its service territory; A-212955F0017. Staff recommends a Commission Review of ALJ Fordham’s Initial Decision approving the Amended Application. Motion of Vice Chairman Cawley that the record must show that Applicant has met the requirements of 52 Pa. Code §3.501. As such, FUS is directed to review Company business plan, compliance with county and municipal plans, applicable zoning designations and status of well permit applications. FUS is to prepare a report on its findings for Public Meeting of October 19, 2006. Vote of 5-0 with no further discussion.

ALJ-0589*, Merwin Group - Mark Reisner, Managing Director v. Verizon PA Inc.. On May 2, 2006 a complaint was filed alleging a service dispute. On June 1, 2006, Verizon filed an Answer with New Matter and a Preliminary Objection. No hearings were held; C-20066329. Staff recommends Commission Review of Chief ALJ Smith’s Initial Decision dismissing the complaint. Postponed by Commissioner Shane until Public Meeting of September 28, 2006.

ALJ-0592*, PA PUC v. PECO Energy Company - Gas Division 1307(f) Reconciliation Filing. On June 1, 2006 PECO filed its Purchased Gas Cost rate to become effective for service rendered on and after December 1, 2006. No hearings were held. On August 4, 2006, a Joint Petition for Complete Settlement was filed; R-00061501, R-00061501C001, R-00061501C002. Staff recommends Review of ALJ Smolen’s Recommended Decision adopting the Settlement. Statement of Vice Chairman Cawley that he is concerned regarding the expansion of hedged volumes of PGC customers and that “parties going forward make sure that adequate attention is given to the cost and operational flexibility related to further expansion of future hedging strategies.” Vote of 5-0 with no further discussion.

ALJ-0594*, PA PUC v. Metropolitan Edison Company, PA PUC/Penelec Industrial Customer Alliance v. Pennsylvania Electric Company, The Richards Energy Group, Inc. v. Metropolitan Edison Company and Pennsylvania Electric Company, Middle Atlantic Power Supply Association. On November 4, 2005, the Commission entered a Tentative Order in this proceeding which modified a non-unanimous settlement which proposed to resolve Met-Ed and Penelec’s Generation Rate Adjustment mechanism proposal. By Commission Order entered April 7, 2006, the case was remanded to OALJ to recommend on whether the automatic renewing twelve-month supply contract provision should be retained. Hearings were held and a Second Amendment Joint Petition was filed on July 27, 2006; R-00016219, R-00016219C0001, R-00016220, R-00016220C0001, C-20028926. Staff recommends Review of Judge Gesoff’s Recommended Decision adopting the Second Amended Joint Petition. Statement of Vice Chairman Cawley regarding concern with high administrative cost and potential barriers imposed by switching fees, restrictions and penalties which may remain as impediments to competitive market development. Vote of 5-0 with no further discussion.

ALJ-0595*, PA PUC v. Pennsylvania-American Water Company. On November 26, 2002, PAWC filed a Petition seeking the Commission’s approval to implement a Collection System Improvement Charge to become effective April 1, 2003. The effective date of the proposed charge was subsequently extended to October 1, 2003. By Order entered November 7, 2003, the Commission approved the Recommended Decision issued July 2, 2003, in which the ALJ recommendation that PAWC’s Petition be granted, with modifications. The Commonwealth Court remanded this matter to the Commission. On June 8, 2006, a Joint Petition for Settlement of Remand Proceeding and Approval of Refund Plan was filed. Staff recommends Review of ALJ Colwell’s Recommended decision approving the Joint Petition. Statement of Commissioner Pizzingrilli commending the parties for their resolution of the matter of refunds to wastewater customers following Commonwealth Court’s reversal of the Commission’s approval of a CSIC, similar to a wastewater system DSIC. Vote of 5-0 with no further discussion.

CARRY-IN AGENDA

Office of Special Assistants

OSA-280*, Final Rulemaking Order - Reconsideration, Interconnection Standards for Customer-generators pursuant to the Alternative Energy Portfolio Standards Act; L-00050175, M-00051865. Staff recommends that the Commission adopt the proposed Order together with Annex A, which reconsiders the August 22, 2006, Order and sets forth the necessary four modifications to that Order. Vote of 5-0 with no discussion.

Bureau of Fixed Utility Services

FUS-1039*, Application of Gasco Distribution Systems, Inc. for approval to transfer assets and abandon service. Gasco filed for approval of the transfer of its Claysville Division’s assets to Utility Pipeline Ltd. And immediately thereafter to Knox Energy Cooperative Association and for the abandonment of service by Gasco; A-120002F2001. Staff recommends that the Application be approved, consistent with the proposed Order. Postponed by Commissioner Shane until Public Meeting of September 28, 2006.

Law Bureau

L-0059*, Ratification of Emergency Orders Issued by Vice Chairman James H. Cawley and Director of Operations Karen Moury on September 6, 2006 and September 8, 2006, Respectively in Re: City of Chester and Conrail; P-00062236, A-00121915. Vote of 5-0 with no discussion.

L-0066*, Interpretation of Procedural Rules Regarding Party Status, Rights and Obligations; M-0006_____, L-00020156. Staff recommends that the Commission solicit Comments on the Proposed Policy Statement to be published in the Pennsylvania Bulletin. Vote of 5-0 with no discussion.

THE NEXT REGULAR MEETING IS SET FOR THURSDAY, SEPTEMBER 28, 2006 AT 10:00 AM.

*Denotes Order