Direct Testimony of Mayor of Charleston, Danny Jones and Timothy

a
SPILMAN THOM,AS & BATTLE,pLLC
A T T O R N E Y S
A T
L A W
Direct Dial: 304.340.3831
e-mail: ifeinberg@spilrnanlaw.com
November 14,2007
VIA HAND DELIW?R Y
Sandra Squire
Executive Secretary
Public Service Commission of West Virginia
201 Brooks Street
Charleston, West Virginia 2530 1
Re:
Case No. 07-0998-W-42T
West Virginia-AmericanWater Company
Rule 42T Application to Increase
Water Rates and Charges
Dear Ms. Squire:
Enclosed for filing on behalf of the City of Charleston and SWVA, Inc. in the abovereferenced matter are an original and twelve copies of the following:
1.
Direct Testimony of Mayor Danny Jones;
2.
Direct Testimony of Timothy R. Duke
Please do not hesitate to contact me if you have any questions regarding this matter.
u
Lee F. Feinberg
(WV State Bar #1173)
LFF/tmg:mi 17
Enclosures
cc:
See Certificate of Service
Spilman Center i 300 Kanawha Boulevard,East t Post Office Box 273 t Charleston,West Virginia 25321-0273
www.spilmanlaw.com i 304.340.3800 i 304.340.3801 fax
West Virginia
North Carolina
Pennsylvania
Virginia
CERTIFICATE OF SERVICE
I, Lee F. Feinberg, Counsel for the City of Charleston and SWVA, Inc. do hereby certifL that on
this 14* day of November, 2007, the Direct Testimony of Mayor Danny Jones and Direct Testimony of
Timothy R. Duke; was served upon:
VIA U.S. Mail
Christopher L. Callas, Esquire
John Philip Melick, Esquire
Stephen N. Chambers, Esquire
Jackson Kelly PLLC
P.O. Box 553
Charleston, West Virginia 25322
Robert R. Rodecker, Esquire
P.O. Box 3713
Charleston, West Virginia 25337
David A. Sade, Esquire
Consumer Advocate Division
700 Union Building
723 Kanawha Blvd., East
Charleston, West Virginia 2530 1
Thomas N. Hanna, Esquire
Attorney at Law
P. 0. Box 3967
Charleston, West Virginia 25339
Ray Keener, Esquire
Assistant County Attorney
Kanawha County Commission
P. 0. Box 3627
Charleston, West Virginia 25336
VIA HAND DELIVERY
Meyishi Pearl Blair, Esquire
Public Service Commission
of West Virginia
201 Brooks Street
Charleston, West Virginia 2530 1
8
Lee F. Feinberg (WV
ate Bar # 1173)
1
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
West Virginia-American Water Company
Rule 42T application to
increase rates and charges.
:
Case No. 07-0998-W-42T
8
Q
Please state your name and business address.
9
A
Danny Jones. I am the Mayor of Charleston. My business address is Court and Virginia
Streets, Charleston, WV 25301.
10
11
Q
Are you a resident of the City of Charleston?
12
A
Yes. I have been a resident of the City of Charleston (“Charleston”) for all of my life.
13
Q
What is the purpose of your testimony?
14
A
The purpose of my testimony is to demonstrate the adverse impact that West Virginia-
15
American Water Company’s (the “Company”) proposed increase in water rates will have
16
on the citizens of Charleston, and will have on the City itself.
17
Q
requested in this case?
18
19
Are you familiar with the level of increase in water rates the Company has
A
Yes. The Company originally requested an increase in annual revenues of approximately
20
$24 million or nearly 25%.
Subsequently the Company has reduced the requested
21
increase to about $22.5 million annually.
Mayor Danny Jones
Direct Testimony
Page 2
1
A
Yes. The Company originally requested an increase in annual revenues of approximately
2
$24 million or nearly 25%. Subsequently the Company has reduced the requested
3
increase to about $22.5 million annually.
4
Q
Are there any other rate issues about which the City has concerns?
5
A
Because the Company proposes to create, without statutory or regulatory authority, a low
6
income water discount of 25%’ most other customers, including the City of Charleston
7
will face an even larger increase than would otherwise occur.
8
Q
Have you reviewed the City’s payments for water service?
9
A
Yes. In 2006, the City spent approximately $258,000 for water service to its facilities
10
exclusive of fees for fire hydrants.
11
approximately $58,000 annually for water service to its facilities, exclusive of fire
12
hydrants.
13
Q
14
15
The increase requested would amount to
Please describe the impact such a large increase in water rates would have on the
City.
A
Such a large increase presents a significant challenge to Charleston’s annual budget. As
16
the City faces tighter and tighter budgets this substantial increase can cause an adverse
17
impact on the provision of services to Charleston’s citizens.
18
Q
Does this conclude your testimony at this time?
19
A
Yes, it does.
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
.
West Virginia-American Water Company :
Rule 42T application to
increase rates and charges.
.
Case No. 07-0998-W-42T
DIRECT TESTIMONY OF TIMOTHY R. DUKE
1
Q.
PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
2
A.
My name is Timothy R. Duke. My business address is 17fh Street & 2ndAvenue,
Huntington, WV 25703.
3
4
5
Q.
BY WHOM ARE YOU EMPLOYED?
6
A.
I am employed by SWVA, Inc., (“SWVA”).
8
Q.
WHAT IS YOUR POSITION WITH SWVA, Inc.?
9
A.
I am President and CEO of SWVA, Inc.
7
Timothy R. Duke
Page 2
1
Q.
2
3
PLEASE
DESCRIBE
YOUR
EDUCATIONAL
AND
EMPLOYMENT
BACKGROUND.
A.
I earned an MBA from Duquesne University and a B.S. in Business from Pennsylvania
4
State University.
5
Accountant, and a Certified Computer Professional. I have 35 years of progressive
6
management experience in heavy industry. I have worked at SWVA since 1987. Prior to
7
that, I worked for several Fortune 500 manufacturing companies.
I am a Certified Public Accountant, a Certified Management
8
9
Q.
IN WHAT TYPE OF BUSINESS IS SWVA, INC. INVOLVED?
10
A.
SWVA, Inc., operates a steel mini-mill and a steel fabrication facility for the manufacture
11
and distribution of special sections and steel billets. SWVA, Inc., custom designs and
12
manufactures special steel products principally for use in the construction of truck
13
trailers, industrial lift trucks, off-highway construction equipment (such as bulldozers and
14
graders), manufactured housing, guardrail post, and in the mining industry.
15
16
Q.
PLEASE PROVIDE A BRIEF HISTORY OF THE SWVA, INC., FACILITY,
17
A.
The facility originated in the early twentieth century and was operated fiom 1909 to 1956
18
by the Schonthan family. It began with fewer than 30 employees in a 7,200 square-foot
19
building on a three-acre site on the Ohio River at Seventeenth Street. The plant was then
20
owned by H.K. Porter from 1956 until 1982. In 1982 the plant was closed because it was
21
unprofitable. The primary reasons for its closure were a lack of capital investment and a
22
restrictive union labor contract.
23
.
Timothy R. Duke
Page 3
1
In August 1982, local private investors purchased the assets and negotiated a non-
2
restrictive labor contract. Since that time, SWVA, Inc., has expanded to forty-four acres
3
between Fourteenth and Twentieth Streets in Huntington and spent millions of dollars in
4
capital upgrades. We currently employ approximately 502 individuals. From December
5
1998 until April 2006, Roanoke Electric Steel Corporation owned SWVA which it had
6
purchased on December 16, 1998. On April 12,2006, Steel Dynamics, Inc. purchased all
7
of Roanoke Electric Steel. SWVA, Inc. now operates as a wholly owned subsidiary of
8
Steel Dynamics, Inc. SWVA's industrial and office buildings incorporate over 500,000
9
square feet and contain state of the art steel-making and finishing equipment to meet
10
customers' specifications.
11
SWVA, Inch, manufacturing process includes a melt shop, rolling mills, fabricating
12
facilities, warehousing, and a distribution center. We utilize all kinds of scrap metal such
13
as shredded automobiles, old appliances, wheel rims, and metal shavings, and we re-melt
14
them using electricity in our two 70 ton electric arc hrnaces. Our recycling of scrap
15
metal into useable products is significantly beneficial to the environment. If it were not
16
for companies like ours, these large amounts of scrap metal would have to be disposed of
17
in landfills and would take years to rust away.
18
19
Q.
PLEASE DISCUSS SWVA, INC.'S IMPACT ON THE LOCAL ECONOMY.
20
A.
In fiscal year ended 2006, SWVA, Inc., paid a total of $45.1 million in direct wages and
21
benefits to our employees, and we support large numbers of suppliers in our local
22
economy by purchasing millions of dollars of supplies, repair items, and spare parts. We
23
also hire the services of numerous local maintenance and construction contractors. In
Timothy R. Duke
Page 4
1
addition, we pay approximately $3.0 million in local and state income and property taxes
2
annually.
3
4
Q.
5
6
PLEASE DESCRIBE WHY THIS CASE IS IMPORTANT TO INDUSTRIAL
CUSTOMERS LIKE YOURSELF.
A.
SWVA, Inc., was closed in 1982 as it was not competitive and was unprofitable. A group
7
of local investors saved the plant from demolition by investing in the idled facility. A
8
total of $148.2 million has been reinvested in the plant since 1982 to keep it competitive
9
in the world market.
10
Knowing the background of our company and the world market in which we have to
11
compete, this case is extremely important to an industrial customer like SWVA, Inc. We
12
compete against both other domestic steel producers along with world-wide producers.
13
In order to remain competitive we have had to expend over $148 million to modernize
14
the plant. Other costs continue to rise, particularly health care and electricity. We
15
operate in a low margin cyclical business and find it quite difficult to pass along a cost
16
increase. It is not likely that we will be able to pass this increase along to our customers.
17
18
Q.
IF THE COMMISSION WERE TO APPROVE WEST VIRGINIA-AMERICAN
19
WATER’S PROPOSED RATE INCREASE, WHAT WOULD BE THE IMPACT
20
ON YOUR FACILITY?
21
A.
In 2006 we spent approximately $463,000.00 for water service to our facilities. The
22
increase requested would add approximately $104,000.00 annually for water service to
23
SWVA, Inc.
Timothy R. Duke
Page 5
1
2
Q.
DOES THIS CONCLUDE YOUR TESTIMONY?
3
A.
Yes.