Chapter 695 Oregon Laws 1999

Session Law

AN ACT

SB 712

Relating to regulating water utility service.

Whereas the elimination and future prevention of duplication of water utility facilities is a matter of statewide concern; and

Whereas, in order to promote the efficient and economic use and development and the safety of operation of water utility services while providing adequate and reasonable service to all territories and customers affected thereby, it is necessary to regulate in the manner provided in this 1999 Act all persons and entities providing water utility service; now, therefore,

Be It Enacted by the People of the State of Oregon:

SECTION 1. As used in sections 1 to 8 of this 1999 Act:

(1) "Commission" means the Public Utility Commission.

(2) "Community water supply system" means a water source and distribution system, whether publicly or privately owned, that serves more than three residences or other users to whom water is provided for public consumption, including but not limited to schools, farm labor camps, industrial establishments, recreational facilities, restaurants, motels, mobile home parks or group care homes.

(3) "Water utility" means any corporation, company, individual or association of individuals, or its lessees, trustees or receivers, that owns, operates, manages or controls all or a part of any plant or equipment in this state for the production, transmission, delivery or furnishing of water, directly or indirectly to or for the public, whether or not such plant or equipment or part thereof is wholly within any town or city. "Water utility" does not include a municipal corporation.

SECTION 2. (1)(a) A water utility providing water service shall make application within 120 days of the effective date of this 1999 Act to the Public Utility Commission for an order designating the territory that it served adequately and exclusively on the effective date of this 1999 Act as its exclusive service territory. The application may also include any adjacent territory that the water utility plans to serve in the six months following the date of the application if such adjacent territory is not being served by another water utility and the applicant demonstrates that it is more economical and feasible to serve by an extension of the applicant's existing facilities than by an extension of the facilities of another water utility or community water supply system.

(b) Application shall be made on forms provided by the commission and shall contain all information required by commission rule.

(2) Within 30 days after the filing of an application, the commission shall give notice of the filing:

(a) By publication at least once weekly for two consecutive weeks in a newspaper or newspapers of general circulation in the territory covered by the application; and

(b) By written notice of the application to known providers of similar utility service in adjacent territories.

(3) The commission:

(a) May, on its own motion, hold a hearing on the application; or

(b) Shall hold a hearing on the application if a customer of the water utility requests a hearing on the application within 30 days of the notice.

(4) If a hearing is scheduled, the commission shall give notice of the hearing, setting the date and place of hearing. If the hearing is at a customer's request, the commission shall give notice of the hearing within 30 days of the request. The hearing shall be held at a place within or conveniently accessible to the territory covered by the application.

(5) The commission may make such investigations respecting an application for the designation of exclusive service territory as the commission deems proper, including physical examination and evaluation of the facilities and systems of the applicant, estimates of their operating costs and revenues, and studies of such other information as the commission deems relevant.

(6) The applicable provisions of ORS 756.500 to 756.610 shall govern the conduct of hearings under this section.

(7) If the commission considers competing applications to serve the same territory, there shall be a disputable presumption that applicants have an equal ability to extend, improve, enlarge, build, operate and maintain existing or proposed facilities.

SECTION 3. (1) Based on an application submitted to the Public Utility Commission under section 2 of this 1999 Act or, if there is a hearing, based on the record made at the hearing, the commission shall enter an order approving, disapproving or amending the application, together with findings of fact supporting the order.

(2) Before approving an application designating exclusive service territory, the commission must find that the applicant is adequately and exclusively serving the territory covered by the application and, in the case of an adjacent unserved area, that it is more economical and feasible to serve the area by extending the applicant's existing facilities than by an extension of the facilities of another water utility or community water supply system.

SECTION 4. Any party to a hearing under section 2 of this 1999 Act may commence a suit to vacate and set aside the commission's order as provided in ORS 756.580 to 756.610. If a suit is not filed within the specified time, the order thereafter shall be valid and enforceable for the purposes specified in the order. If a suit to vacate or set aside the commission's order is filed, the validity of the order shall be determined by the final judgment.

SECTION 5. (1) The rights acquired by the designation of an exclusive service territory may be assigned or transferred only with the approval of the Public Utility Commission after a finding that the assignment or transfer is in the public interest. However, a hearing is not required if at least 75 percent of the affected customers agree to the proposed assignment or transfer.

(2) An order designating an exclusive service territory shall not be construed to confer any property right. However, upon the death of an applicant under an approved designation, the executor or administrator shall continue operating the water utility for the purpose of transferring such rights for a period not to exceed two years from the date of death.

(3) The territory served by a water utility under an order of the commission designating exclusive service territory shall not be altered solely as the result of a change in ownership or form of ownership.

SECTION 6. (1) Designated service territories of a water utility approved by the Public Utility Commission shall be exclusive. A water utility or community water supply system shall not provide water utility service within the designated exclusive service territory of another water utility without the express approval of the commission.

(2) A water utility shall serve only customers within its designated exclusive service territory and shall serve all applicants for service within its designated territory. The water utility may refuse service only as provided by commission rule.

(3) Upon petition by the water utility for an order, or by the commission on its own motion, a designated service territory may be expanded to include unserved areas. In reviewing a petition, the commission shall consider at least the current ability of the water utility to serve the expanded area, the demand for service in the expanded area, the impact on existing customers and the availability of alternative service. The commission may take other factors into consideration as prescribed by commission rule. Notice and hearing of the proposed expansion shall be given as provided in section 2 of this 1999 Act.

(4) Upon petition by the water utility or a customer of the utility for an order, or by the commission on its own motion, a designated exclusive service territory may be decreased upon a showing that the water utility is not providing adequate service to its customers or does not have the capacity to serve the designated area. Notice of the proposed decrease of service territory shall be given as provided in section 2 of this 1999 Act.

SECTION 7. In the event a designated exclusive service territory is served by a person not authorized by the Public Utility Commission, the commission or the water utility designated by the commission to serve the area may file an action for injunctive relief in the circuit court for any county where some or all of the designated service territory is located. The action shall proceed as in an action not triable by right to a jury. Any party to the action may appeal to the Court of Appeals from the trial court's order. An injunction ordered under this section shall be in addition to any other remedy provided by law.

SECTION 8. (1) The provisions of sections 1 to 8 of this 1999 Act shall not be construed to restrict the powers granted to cities to issue franchises or to restrict the powers of condemnation of a municipality.

(2) The provisions of sections 1 to 8 of this 1999 Act shall not be construed to restrict the formation of homeowners associations pursuant to ORS chapter 94, cooperatives pursuant to ORS chapter 62 or districts pursuant to ORS chapter 198 within the designated exclusive service territory of a water utility. A homeowners association, cooperative or district may petition the Public Utility Commission for an order excluding the association, cooperative or district from the exclusive service territory of a water utility. Upon a showing by the association, cooperative or district that exclusion is not detrimental to the public interest, the commission may issue an order excluding the association, cooperative or district from the exclusive service territory of a water utility.

(3) The commission shall recognize the service territories of a water utility that has an existing franchise on the effective date of this 1999 Act with a municipality as exclusive service territories. Upon application as provided in section 2 of this 1999 Act, any such water utility may request an order from the commission to designate exclusive service territories in addition to those identified in the franchise agreement if the water utility is providing adequate and exclusive service to areas outside the areas identified in the franchise agreement.

(4) A district, as defined in ORS 198.010, that provides water utility service shall be exempt from the requirements of section 2 of this 1999 Act. However, upon request of the commission, the district shall provide to the commission a map of its service territory and shall in all other respects comply with the requirements of sections 1 to 8 of this 1999 Act.

Approved by the Governor July 14, 1999

Filed in the office of Secretary of State July 15, 1999

Effective date October 23, 1999

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