N.Y. Public Service Law § 89-c: General powers of commission in respect to water supply

§ 89-c. General powers of commission in respect to water supply. The

commission: 1. Shall have general supervision of all water-works

corporations, as hereinbefore defined, having authority under any

general or special law or under any charter or franchise to lay down,

construct or maintain pipes, conduits, ducts or other fixtures in, on or

under the streets, highways and public places of any municipality, for

the purpose of furnishing or distributing water for domestic, commercial

or public uses, and all water systems owned, leased or operated by any

such water-works corporation; provided, however, that nothing herein

contained shall be construed to delegate the general powers of the state

department of health or of the water power and control commission or any

of the powers and functions of either as provided by law, nor shall

anything herein contained be construed to impair nor to deprive such

department or commission of its powers and functions as now provided by

law.

2. Shall have power of its own motion to examine and investigate the

methods employed by water-works corporations in delivering and supplying

water and furnishing equipment, and shall have access through its

members or through an officer or employee specially authorized by it to

make such examinations and investigations to all parts of the systems

owned, used or operated for the distribution of water by any such

corporation.

3. Shall have power, in its discretion, to prescribe uniform methods

of keeping accounts, records and books to be observed by water-works

corporations. It may also, in its discretion, prescribe by order forms

of accounts, records and memoranda to be kept by such corporations.

Notice of alterations by the commission in the required method or form

of keeping a system of accounts shall be given to such corporations by

the commission at least six months before the same shall take effect.

Any other and additional forms of accounts, records and memoranda kept

by such corporations shall be subject to examination by the commission.

4. Shall have power to examine all water-works corporations and keep

informed as to the methods, practices, regulations and property employed

by them in the transaction of their business. Whenever the commission

shall be of the opinion, after a hearing had upon its own motion or upon

complaint, that the rates, charges or classifications or the acts or

regulations of any such corporation are unjust, unreasonable, unjustly

discriminatory, or unduly preferential, or in any wise in violation of

any provision of law, the commission shall determine and prescribe in

the manner provided by and subject to the provisions of section

eighty-nine-j of this chapter, the just and reasonable rates, charges

and classifications thereafter to be enforced for the service to be

rendered, notwithstanding that a different rate or charge has heretofore

been prescribed by general or special statute, contract, grant,

franchise, condition, consent or other agreement, and the just and

reasonable acts and regulations to be done and observed; and whenever

the commission shall be of opinion, after a hearing had upon its own

motion or upon complaint, that the property, equipment or appliances of

any such corporation are unsafe, inefficient or inadequate, the

commission shall determine and prescribe the safe, efficient and

adequate property, equipment and appliances thereafter to be used,

maintained and operated for the security and accommodation of the public

and in compliance with the provisions of law and of their franchises and

charters; provided, however, that in its determination and prescription

of safe, efficient and adequate property, equipment and appliances as

herein provided any such property, equipment and appliances theretofore

approved by the water power and control commission, or its predecessor,

shall be deemed to have been adequate, safe and efficient at the time of

such approval. Nothing herein contained shall be deemed to dispense with

any approval of work by the water power and control commission required

by the conservation law; and if such an approval pertains to work done

pursuant to such determination or prescription of the public service

commission, such approval shall be conclusive that the work was done in

compliance with such determination or prescription.

5. Shall have power to require every water-works corporation, and it

shall be the duty of every water-works corporation, as defined by this

chapter, to file with the commission an annual report, verified by the

oath of the president, vice-president, treasurer, secretary, manager, or

receiver, if any, or by the person required to file the same. The

verification shall be made by said official holding office at the time

of filing said report, and if not made upon the knowledge of the person

verifying the same, shall set forth the sources of his information and

the grounds of his belief as to any matters not stated to be verified

upon his knowledge. The report shall show in detail (a) the amount of

its authorized capital stock and the amount thereof issued and

outstanding; (b) the amount of its authorized bonded indebtedness and

the amount of its bonds and other forms of evidence of indebtedness

issued and outstanding; (c) its receipts and expenditures during the

preceding year; (d) the amount paid as dividends upon its stock and as

interest upon its bonds; (e) the names of its officers and the aggregate

amount paid as salaries to them and the amount paid as wages to its

employees; (f) the location of its plant or plants and system, with a

full description of its property and franchises, stating in detail how

each franchise stated to be owned was acquired; and (g) such other facts

pertinent to the operation and maintenance of the plants and system, and

the affairs of such person or corporation as may be required by the

commission. Such reports shall be in the form, cover the period, and be

filed at the time prescribed by the commission. The commission may, from

time to time, make changes and additions in such forms. When any such

report is defective or believed to be erroneous, the commission shall

notify the corporation making such report to amend the same within a

time prescribed by the commission. Any such corporation which shall

neglect to make any such report or which shall fail to correct any such

report within the time prescribed by the commission shall be liable to a

penalty of one hundred dollars and an additional penalty of one hundred

dollars for each day after the prescribed time for which it shall

neglect to file or correct the same, to be sued for in the name of the

people of the state of New York, if ordered by the commission. The

amount recovered in any such action to be paid to the commission shall

be paid into the state treasury and be credited to the general fund. The

commission, for cause shown, may extend the time prescribed and, by

compromise, may accept less than the amount of such a penalty, in

settlement thereof.

6. Shall have power, either through its members or inspectors or

employees duly authorized by it, to enter in or upon and to inspect the

property, buildings, plants, pump houses, ducts, conduits and offices of

any such water-works corporation.

7. Shall have power to examine the accounts, books, contracts,

records, documents and papers of any water-works corporation, and have

power, after a hearing, to prescribe by order the accounts in which

particular outlays and receipts shall be entered, charged or credited.

At any such hearing the burden of proof shall be on such corporation to

establish the correctness of the accounts in which such outlays and

receipts have been entered, and the commission may suspend a charge or

credit pending submission of proof by such corporation.

§ 8. Shall have power to compel, by subpoena duces tecum, the

production of any accounts, books, contracts, records, documents,

memoranda and papers. In lieu of requiring production of originals by

subpoena duces tecum the commission or any commissioner may require

sworn copies of any such books, records, contracts, documents and

papers, or any parts thereof, to be filed with it. The commission may

require of all such water-works corporations specific answers to

questions upon which the commission may need information, and may also

require such corporations to file periodic reports in the form, covering

the period and filed at the time prescribed by the commission. If such

corporation shall fail to make specific answer to any question or shall

fail to make a periodic report when required by the commission as herein

provided within the time and in the form prescribed by the commission

for the making and filing of any such report or answer, such corporation

shall forfeit to the state the sum of one hundred dollars for each and

every day it shall continue to be in default with respect to such report

or answer. Such forfeiture may be recovered in an action brought by the

commission in the name of the people of the state of New York. The

amount recovered in any such action, or paid to the commission, shall be

paid into the state treasury and be credited to the general fund. The

commission, for cause shown, may by compromise accept less than the

amount of such forfeiture, in settlement thereof.

9. Shall have power in all parts of the state, either as a commission

or through its members, or through an officer or employee specially

authorized to conduct an investigation or hearing, to subpoena

witnesses, take testimony and administer oaths to witnesses in any

proceeding or examination instituted before it, or conducted by it in

reference to any matter within its jurisdiction under this article.

10. (a) Shall have power to require every water-works corporation to

file with the commission and to print and keep open to public inspection

schedules showing all rates and charges made, established or enforced or

to be charged or enforced, all forms of contract or agreement and all

rules and regulations relating to rates, charges or service used or to

be used, and all general privileges and facilities granted or allowed by

such corporation; but this subdivision shall not apply to state,

municipal or federal contracts.

(b) No change shall be made in any rate or charge, or in any form of

contract or agreement or any rule or regulation relating to any rate,

charge or service, or in any general privilege or facility, which shall

have been filed by such a corporation, in compliance with an order of

the commission, except after thirty days' notice to the commission and

to each county, city, town and village served by such water-works

corporation which had filed with such corporation, within the prior

twelve months, a request for such notice and which shall be affected by

such change and publication of a notice to the public of such proposed

change once in each week for four successive weeks in a newspaper having

general circulation in the county or counties containing territory

affected by the proposed change, which notice shall plainly state the

changes proposed and when the change will go into effect. The commission

for good cause shown may, except in the case of major changes, allow

changes to take effect prior to the end of such thirty-day period and

without publication of notice to the public under such conditions as it

may prescribe. The commission may delegate to the secretary of the

commission its authority to approve a change to a schedule postponing

the effective date of such schedule previously filed with the commission

and to allow for good cause shown the postponement to take effect prior

to the end of such thirty-day period and without publication of notice

to the public.

(c) For the purpose of this subdivision, "major changes" shall mean an

increase in the rates and charges which would increase the aggregate

revenues of the applicant more than the greater of three hundred

thousand dollars or two and one-half percent, but shall not include

changes in rates, charges or rentals allowed to go into effect by the

commission or made by the utility pursuant to an order of the commission

after hearings held upon notice to the public.

(d) No such corporation shall charge, demand, collect or receive a

greater or less or different compensation for any service rendered or to

be rendered than the rates and charges specified in its schedule filed

and in effect; nor shall any such corporation refund or remit in any

manner or by any device any portion of the rates or charges so

specified, nor extend to any person any form of contract or agreement,

or any rule or regulation, or any privilege or facility, except such as

are regularly and uniformly extended to all persons under like

circumstances.

(e) The commission shall have power to prescribe the form of every

such schedule and from time to time prescribe by order such changes in

the form thereof as may be deemed wise. The commission shall also have

power to establish such rules and regulations to carry into effect this

subdivision as it may deem necessary, and to modify or amend such rules

or regulations from time to time.

(f) Whenever there shall be filed with the commission by any

water-works corporation any schedule stating a new rate or charge, or

any change in any form of contract or agreement or any rule or

regulation relating to any rate, charge or service, or in any general

privilege or facility, the commission may, at any time within sixty days

from the date when such schedule would or has become effective, either

upon complaint or upon its own initiative, and, if it so orders, without

answer or other formal pleading by the interested corporation, but upon

reasonable notice, hold a hearing concerning the propriety of a change

proposed by the filing. If such change is a major change, the commission

shall hold such a hearing. Pending such hearing and decision thereon,

the commission, upon filing with such schedule and delivering to the

corporation affected thereby a statement in writing of its reasons

therefor, may suspend the operation of such schedule, but not for a

longer period than one hundred and twenty days beyond the time when it

would otherwise go into effect. After a full hearing, whether completed

before or after the schedule goes into effect, the commission may make

such order in reference thereto as would be proper in a proceeding begun

after the rate, charge, form of contract or agreement, rule, regulation,

service, general privilege or facility had become effective. If any such

hearing cannot be concluded within the period of suspension as above

stated, the commission may extend the suspension for a further period

not exceeding six months.

(g) The commission may, as authorized by section eighty-nine-j of this

article, establish temporary rates or charges for any period of

suspension under this section.

(h) At any hearing involving a rate, the burden of proof to show that

the change or proposed change if proposed by the corporation, or that

the existing rate, if it is proposed to reduce the rate, is just and

reasonable shall be upon the corporation; and the commission may give to

the hearing and decision of such questions preference over all other

questions pending before it.

(i) The schedule, rates, charges, form of contract or agreement, rule,

regulation, service, general privilege or facility in force when the new

schedule, rate, charge, form of contract, rule, regulation, service,

general privilege or facility was filed shall continue in force during

the period of the suspension unless the commission shall establish a

temporary rate or charge as authorized by section eighty-nine-j of this

article.

* (j) (i) The commission shall require each application for a major

change in rates filed by a water-works corporation to include an

executive compensation disclosure. Such executive compensation

disclosure shall include: (A) the median of the annual total

compensation of all employees of the water-works corporation, except for

senior management positions; (B) the annual total compensation of the

chief executive officer; (C) the annual total compensation for each

other senior management position; and (D) the ratio of the amount

described in clause (A) of this subparagraph to the amount described in

clause (B) of this subparagraph.

(ii) For purposes of this paragraph, "senior management positions"

shall include a chief executive officer, chief operations officer, chief

financial officer, chief information officer, chief information

technology officer, officer responsible for regulatory affairs, general

counsel, and any other positions considered to be senior executive

management by the corporation.

* NB Effective January 1, 2027

* (k) (i) The commission shall require each application for a major

change in rates filed by a water-works corporation to include, in

addition to the corporation's recommended proposal, a budget constrained

proposal that separately addresses operating expenses, capital

expenditures, and programmatic or policy expenditures, commodity supply

costs, taxes, and other costs not within the control of the corporation.

Such budget constrained proposal shall not increase the applicant's

aggregate revenues by more than the average annual consumer price index

increases over the prior three years.

(ii) In each application for a major change in rates, the corporation

shall demonstrate how any increase in the applicant's aggregate revenues

by more than the increase set forth in the budget constrained proposal

is necessary to ensure safety, reliability, or the continuation of

affordability programs.

(iii) The commission shall require the corporation to track

expenditures and outcomes and explain all material deviations from the

approved rate plan no less frequently than on a biennial basis.

* NB Effective January 1, 2027

11. In case any water-works corporation is engaged in carrying on any

business other than owning, operating or managing a water system, which

other business is not otherwise subject to the jurisdiction of the

commission, and is so conducted that its operations are to be

substantially kept separate and apart from the owning, operating,

managing or controlling of such water system, said corporation in

respect of such other business shall not be subject to any of the

provisions of this chapter and shall not be required to procure the

assent or authorization of the commission to any act in such other

business or to make any report in respect thereof. But this subdivision

shall not restrict or limit the powers of the commission in respect to

the owning, operating, managing or controlling by such corporation of

such water system, and said powers shall include also the right to

inquire as to, and prescribe the apportionment of, capitalization,

earnings, debts and expenses fairly and justly to be awarded to or borne

by the ownership, operation, management or control of such water system

as distinguished from such other business. In any such case, if the

owning, operating, managing or controlling of such water system by any

such corporation is wholly subsidiary and incidental to the other

business carried on by it and is inconsiderable in amount and not

general in its character, the commission may by general rules exempt

such corporation from making full reports and from keeping of accounts

as to such subsidiary and incidental business.

12. The commission shall have power to require each water-works

corporation to establish classifications of service based upon the

quantity used, the time when used, the purpose for which used, the

duration of use and upon any other reasonable consideration, and to

establish in connection therewith just and reasonable graduated rates

and charges; and it shall have power, either upon complaint or upon its

own motion, to require such changes in such classifications, rates and

charges as it shall determine to be just and reasonable.

13. The commission, of its own motion or upon complaint of any person

or corporation aggrieved, may investigate and determine whether the

property of any corporation or person actually used within the state in

the business of the distribution, sale or furnishing of water for

domestic, commercial or public uses, exclusive of property used solely

for or in connection with the business of bottling, or selling,

distributing or furnishing bottled water, is of a value exceeding ten

thousand dollars. Where such value is ten thousand dollars or less, the

commission may require such persons and corporations to file with the

commission simplified annual reports, in a form and containing such

matters as the commission shall prescribe, and may prescribe simplified

forms of accounts to be kept by them.

14. (a) Notwithstanding any other provision of law to the contrary,

whenever real property owned by a water-works corporation is exempted

from taxation pursuant to the provisions of section four hundred

eighty-five-d of the real property tax law the rate or charge imposed by

such corporation within the taxing jurisdiction providing for such

exemption shall be set by the commission so as to reflect fully the

reduction in cost of service resulting therefrom.

(b) Notwithstanding any other provision of law to the contrary,

whenever a water-works corporation is the recipient of operating

assistance provided by a city pursuant to the provisions of section

twenty-one-e of the general city law, the rate or charge imposed by such

corporation within such city shall be set by the commission so as to

reflect fully the revenues to such corporation resulting therefrom.

15. The commission shall provide for management and operations audits

of water-works corporations having annual gross revenues in excess of

ten million dollars. Such audits shall include, but not be limited to,

an investigation of the corporation's construction program planning in

relation to the needs of its customers for reliable service and an

evaluation of the efficiency of the company's operations. The commission

shall have discretion to have such audits performed by its staff, or by

independent auditors.

In every case in which the commission chooses to have the audit

provided for in this subdivision performed by independent auditors, it

shall have authority to select the auditors and to require the

corporation being audited to enter into a contract with the auditors

providing for their payment by such corporation. Such contract shall

provide further that the auditors shall work for and under the direction

of the commission according to such terms as the commission may

determine are necessary and reasonable.

The commission shall have authority to direct the corporation to

implement any recommendations resulting from such audits that it finds

to be necessary and reasonable.

Upon the application of a water-works corporation for a major change

in rates as defined in subdivision ten of this section, the commission

shall review the corporation's compliance with the directions and

recommendations made previously by the commission, as a result of the

most recently completed management and operations audit undertaken

pursuant to the provisions of this subdivision. The commission shall

incorporate the findings of such review in its opinion or order.

16. Notwithstanding any general or special law, rule or regulation,

the commission shall have the power to provide for the refund of any

revenues received by any water-works corporation which cause the

corporation to have revenues in the aggregate in excess of its

authorized rate of return for a period of twelve months. The commission

may initiate a proceeding with respect to such a refund after the

conclusion of any such twelve month period.

17. The commission shall have power to require each water-works

corporation to establish a process for residents of any cooperative,

condominium or multi-family dwelling with five or more residential

units, which uses a master meter to distribute water to such residents,

to obtain non-billing related information regarding the delivery of

water including but not limited to service updates, water quality

notices and other information deemed essential to water consumers.