Committee Hearing, July 14, 2005

COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES - - - Room 400, City Hall Philadelphia, Pennsylvania Thursday, July 14, 2005, 2:15 p.m. - - - 040298 - Resolution authorizing City Council's Committee on Transportation and Public Utilities to hold public hearings to investigate the proposed nearly 43% water and sewer cost rate increase to be effective July 1, 2004, requested by the Philadelphia Water Department, and in furtherance of such investigation authorizing issuance of subpoenas to compel the attendance of witnesses and the production of documents to the full extent authorized under Section 17 2-401 of the Home Rule Charter. PRESENT: COUNCILMAN MICHAEL NUTTER COUNCILMAN FRANK RIZZO V A R A L L O Incorporated Litigation Support Specialists 1835 Market Street, Suite 600 Philadelphia, Pennsylvania 19103 215.561.2220 215.567.2670 2 P R O C E E D I N G S - - -

Good afternoon, ladies and gentlemen. This is the City Council Committee on Transportation and Public Utilities, the hearing on Resolution No. 040298. I am Councilman Michael Nutter, chair of the committee, and as appointed by the Council President, Councilman Rizzo is serving today on this committee. This is a resolution authorizing City Council Committee on Transportation and Public Utilities to hold public hearings to investigate the proposed nearly 43 percent water and sewer cost rate increase to be effective July 1, 2004, requested by the Philadelphia Water Department, and in furtherance of such investigation authorizing issuance of subpoenas to compel the attendance of witnesses and the production of documents to the full extent authorized under Section 2-401 of the Home Rule Charter. 3 Transportation & Public Utilities Before we start with our witnesses, Councilman Rizzo has a statement. Councilman.

Thank you, Mr. Chairman. Good afternoon. My name is Councilman Frank Rizzo. Thank you for coming today. I also want to thank Water Commissioner Bernard Brunwasser and Hearing Examiner Henri Marcial and Public Advocate Lance Haver. I also thank you, Chairman Michael Nutter of the Transportation and Public Utilities Committee. This is the third hearing on this issue. We had two hearings in May and June of 2004 to investigate the water and sewer rate increase which the Philadelphia Water Department proposed as being nearly 43 percent to raise $311 million. Since then the Hearing Examiner for the water rate increase has been appointed and has made his 4 Transportation & Public Utilities recommendation. The Water Commissioner is expected to make his final decision before the end of the week. The increase is expected to be in the 31 percent range over three years to account for an estimated 220 million requested. $50,000 has been spent to advertise five public hearings at five locations throughout the City. For whatever reason, the participation was low, people. Since 12 then, I have heard from those who have 13 not been heard. The common theme among 14 those who wanted to be heard was we 15 didn't know. The purpose of this hearing 16 is to give you, the public, an 17 opportunity to be heard. Thank you. 18

Thank you, 19 Councilman. 20 The first witness is the Water 21 Commissioner, Bernard Brunwasser. Please 22 come to the witness table, identify 23 yourself.

Good afternoon, Councilman Nutter, Councilman 5 Transportation & Public Utilities Rizzo. I am Bernard Brunwasser, Water Commissioner for the City of Philadelphia. I was hoping I could read an opening statement.

That would be fine. Commissioner, do you have any written testimony for us?

No, since this is a continuation of a prior series of hearings. I'm here today at the committee's request and I'm appearing for the fourth time on the issue of water rates. As you probably know, the legally enacted water rate process has been ongoing since last December. Both formal and informal hearings open to the public have been held under the direction of an independent hearing officer, Mr. Henri P. Marcial. Residential customers have been represented in the formal process by the Public Advocate, Community Legal Services. Commercial industrial customer interests have been represented by the Commercial Customer Consortium. Expert 6 Transportation & Public Utilities witnesses have testified and have been cross-examined. Legal briefs and reply briefs have been rendered. The transcript of the formal and informal hearings has been issued. Most recently, the Hearing Officer has issued his recommended decision for fiscal years 2006 through 2008. In other words, an extensive public record in this matter has been compiled. It is this public record that I'm currently in the process of reviewing so I may be able to render a just and reasonable rate determination. This public record is now closed. My rate determination must be based on the extensive record that has already been compiled. Otherwise, the last eight months of hard work by the Hearing Officer, Public Advocate, the Commercial Customer Consortium, and the Water Department staff and legal team may have been in vain. Therefore, I may not be at liberty to answer some of the questions 7 Transportation & Public Utilities that the committee or the public has for me today. As you have witnessed in the prior three hearings on this matter and in my testimony on operating budget, I have always strived to be responsive to each question I am asked. Today I must be careful not to comment upon those issues that have been aired in the formal rate process. The City and I wish to protect the legal hearing process that has been in place for the past 13 years. Finally, I wish to state that my final rate determination must balance the concerns of all of our customers, our owners, the City of Philadelphia, our bondholders, the Environmental Protection Agency, the Pennsylvania Department of Environmental Protection, and the Delaware River Basin Commission. The department strives to bring its customers the purest drinking water and the cleanest river environment at the lowest cost in the region. Since all of our 8 Transportation & Public Utilities employees, their families, friends, and neighbors live in Philadelphia, it should go without saying that there is a strong focus on keeping our rates affordable. Nationally and internationally, the Philadelphia Water Department is considered one of the finest utilities of its kind. The department has dozens of nationally recognized experts in the many varied fields of water and wastewater treatment, water distribution, wastewater conveyance, biosolids disposition, laboratory sciences, and more. Each year our utility continues to win numerous awards in the industry. I am proud to represent the more than 2,000 hard-working water department employees who have made this utility what it is today. Mr. Chairman, thank you for allowing me to make this opening statement. I should say to my right is Mr. J. Barry Davis of the law department, 9 Transportation & Public Utilities who serves as my legal counsel.

I assume it's Mr. Davis' responsibility to make sure that you don't get in trouble.

That's correct, Councilman.

Councilman Rizzo.

Commissioner, thank you for your opening statement, but I would like for the record to just make -- I just want to make sure I understand. You know the decision because I believe the decision will be tomorrow, your decision?

No, that's not correct.

When will that be?

The decision, there is no time constraint on us per se to make the decision, but in no event I would not expect it until at least a week from today. That would be July 21. We 10 Transportation & Public Utilities are still working on it.

You're still working on it, so that's good. Maybe this hearing will have some influence over your decision then.

I have to say that it should not because of the record in the hearing, the formal hearing, the legally enacted hearing is closed. If there is something that is said here today, it should not have an effect on the final rate determination. Under what I've been told by the law department, the legal department, that record is closed and whatever has been said -- and it's voluminous. It's a voluminous record. Most of these issues that may still be out here and people have interest in were discussed most likely in the hearing process and aired --

Is it true that only 23 people responded to the citywide --

That sounds 11 Transportation & Public Utilities about right to me. I don't have the exact number.

Twenty-three people and you spent $50,000 to advertise that.

I believe so.

But you are the Commissioner. You make the decision. Do you not have -- you're not locked to adopt what the Hearing Examiner's report says. You can deviate from that from what I understand.

I have to give the Hearing Officer -- his report has to be given substantial weight. That is the way the process --

But it's not cast in stone.

No. 21

You do have some flexibility.

I have some flexibility.

So we could 12 Transportation & Public Utilities influence --

If it's on the record, as long as it's in the record. I cannot point to something outside of the record to change my decision.

But we could make a point that you possibly -- that's in the record, in the report, that you could go back and look at a second or third time; correct?

I believe that might be possible. What I should say is the Water Department and all of our employees are always listening to constituents' concerns. We never stop doing that.

When we had previous hearings, we talked about some issues with the suburban communities, wholesale water. Could you elaborate on some of the things that as a result of those hearings that have transpired that are in that record that could influence the decision on the rate increase? 13 Transportation & Public Utilities

There has been some recent good news and it will -- it's in the record and will affect to some degree the final rate determination. And that I actually have to -- before Councilman Nutter leaves, I just want to tip my hat to him --

I'm not going anywhere.

He's just getting some water.

-- and to you, Councilman Rizzo, for putting me in touch some months back with some of the political leadership in the Bucks County area. And it gave me an opportunity to give the Water Department's side of the story in a dispute with Bucks County Water and Sewer. That quickly led to serious discussions with Bucks County Water and Sewer and they have opted to buy more capacity, more sewage capacity in Philadelphia as part of our northeast wastewater treatment plant and have -- 14 Transportation & Public Utilities are in the process -- have already made one payment of about $9 million and we're expecting another payment of a similar amount, a little bit higher, in August for this additional capacity that we will be accepting from Bucks County. Now, much of that money is capital in nature and that money may well be used in doing some expansion work at the northeast plant to accept the greater flow.

Thank you, Mr. Chairman.

Commissioner, thank you for the information. And I appreciate the compliment. At the same time, you did all the work. I just tried to make the connections between yourself and the political leaders in Bucks County. Let's go back to the issue about the five hearings. Do you recall when they were?

We can provide that information for you. I don't have 15 Transportation & Public Utilities it with me currently.

Do you recall where they were?

Only to say that they were in different -- they were in different neighborhoods in the city. Yes, we have that information actually with us and we'll just have you look at that.

Thank you.

Again, I was not part of the hearing process.

I understand that.

I used to be part of the hearing process in my former jobs.

So it looks like the first one was Wednesday, March 30, 6:00 to 8:00 at Hunter School.

I think that one became a problem which I think it may have been moved to a different location. So I would say that probably four out of 16 Transportation & Public Utilities those five locations are accurate and one may have been moved.

And as the Councilman pointed out and you seemed to at least generally agree, are you saying that at the total of all five hearings there were people? 9

Again, I'm not 10 certain but I will accept that. That 11 sounds within reason of what I had heard. 12 Now, it's not that much different than 13 the prior set of hearings back in 2001. 14 There was relatively little -- you know, 15 seemed to be very little interest. Those 16 were very small rate increases we were 17 dealing with. Now, back in the early 18 '90s it was a different story when we 19 used to come in with some very large rate 20 hikes, the end of the plant expansion 21 period. 22

Well, would 23 you consider this relatively small, relatively large, or somewhere in between, 42 percent over three years? 17 Transportation & Public Utilities Would you consider that to be relatively small, relatively large, or somewhere in between?

That is I would guess relatively large. But across the country it's probably somewhat in the middle at this point in time. That number has come down, though.

But, as you can imagine, notwithstanding newspapers, Internet, and the like, most Philadelphians actually live in Philadelphia so possibly are not paying that much attention to water rates across the country. So to what would you attribute such a small number of people coming out to hearings about what you've at least characterized as a relatively large increase? Why do you think that is?

That would be speculation on my part. I really can't speculate.

And did I 18 Transportation & Public Utilities take down correctly you said the decision you anticipate being made somewhere on or about July 21?

We hope that will be ready by about that point in time, yes.

And, lastly, with regard to the Bucks County situation, getting a resolution to that and you've articulated what sounds like some fairly hefty payments, does that play into or how would that impact the overall water rate increase?

That's really to be determined.

I understand.

Clearly, it wouldn't increase rates.

Well, yeah. Okay. We can agree on that. Councilman Rizzo, any other questions?

I'm fine. 19 Transportation & Public Utilities

Commissioner, thank you very much. Are you going to be able to stay for a little bit in case anything comes up?

Sure.

Great. Thank you. Henri Marcial, did I come close to saying that correctly?

Very.

For the record, I did have two years of French.

I'm not French.

Well, I just wanted you to know that as a part of the process here, but I actually didn't do that well in that particular subject matter. So why don't you identify yourself for the record and tell us what's on your mind.

My name is Henri Marcial. I am an attorney here in the City of Philadelphia and I was contracted to be the Hearing Examiner in this 20 Transportation & Public Utilities particular matter. As a general rule of thumb, I followed the Council's regulations, which are published, as to how these proceedings were to be conducted. And we spent approximately seven to eight months now on these proceedings. I initially came on board in December. We bifucated the proceedings due to the delay. And we just completed and, as you probably already know, I've issued my recommended decision.

Okay. And I did receive your report this morning. Could you just for the record -- is this your first time appearing before us?

Yes, it is.

Could you just give us a little bit of background information in terms of the nature of your work? Have you been a Hearing Examiner before for the City? Just a little bit of that.

This is my first 21 Transportation & Public Utilities time as a Hearing Examiner for the City. I was prior to this an employee of PECO Energy company in their rates and regulatory division in their legal department. I spent the last year working as a real estate developer for Norris Square Civic Association in North Philadelphia. And that was what I did prior to taking on this matter, at which time I ceased that and started focusing solely on this matter and the development of my own solo legal practice.

You've issued your report. I believe it's the same we have here. It's dated June 17, 2005; is that correct?

Correct.

And what are your primary conclusions?

The recommended decision is self-explanatory. In short, I have directed the Water Department to make some recalculations to adjust for the Bucks County settlement and to adjust 22 Transportation & Public Utilities for the final issuance and interest rate figures related to the 2005 bond issuances, of which there were two. And those are in addition to the negotiated decreases in rates between the Public Advocate, the Water Department, and the Commercial Consumer Consortium.

And I guess my last question would be the originally announced or proposed increase was 43 percent over a three-year period. Do you have a specific recommendation with regard to that or a position?

It's very difficult to in my position to based on the recalculations that I've ordered come up with a percentage. I can give you some gross figures. The original request from the Water Department was approximately $311 million. In Phase of these proceedings for 2005, that was reduced. Since 2005 was handled separately, the remainder was approximately in the 260 million number. 23 Transportation & Public Utilities That again was reduced once adjustments were made for a complete removal of the lateral program to approximately 200 and I want to say 30 million, which was further reduced to 217 million by the time I received the remainder of the record.

Hold on for a second. You've made the statement a couple of times. When you say it was reduced, what was reduced and by whom?

The overall dollar figure for the rates requested by the Water Department were reduced via several I'll call them rounds of negotiations between the parties.

The parties being?

The Public Advocate, the Commercial Consortium, and the Water Department.

So the original amount was 311.

And by the time I 24 Transportation & Public Utilities received the final record from the hearings and the briefs, that amount had been reduced to approximately 217 million. My decision further -- should further reduce that figure.

311 to 217. That's almost a third?

Close. It's a little over $90 million, $94 million, I believe.

Okay. Councilman.

Thank you, Mr. Chairman.

Any other information, Mr. Marcial?

No, not unless you have a specific question.

Councilman Rizzo.

Could you just go back and tell us about the relationship with water and sewage in Bucks County? What developed to -- what 25 Transportation & Public Utilities exactly occurred there to bring some numbers in? Would you explain what happened in this commercial relationship with Bucks County?

As a broad overview, because these proceedings were bifucated, the first phase of these proceedings allowed for rates to be set for 2005. That decision also held that at the end of the fiscal year, a true-up or adjustment would be made to accurately reflect the business up to that point in time, the business of the Water Department, revenues and expenses, since that was an emergency proceeding and there were some extenuating circumstances. And during the course of that time, there was the Bucks County settlement, which is basically a business transaction between the Water Department and Bucks County's water and sewer authorities.

Excuse me. What was the argument? You're using the Transportation & Public Utilities word "settlement." What was the dispute?

It's not a settlement in terms of a dispute. It's a settlement in terms of a business negotiation as far as I understand it. I did not have any function in that other than to indicate to the Water Department that those dollar figures --

We're not interrupting you, but we're getting a signal that someone wants to have some input here. You complete your statement and then they can add whatever.

It is my understanding that it is more of a business arrangement. Those dollar figures fall into the economic stream of funds for 2005 fiscal year. They impact the dollars and the rates for 2005. As part of the decision that there be an adjustment to reflect the actual expenses and revenues for 2005, those dollar figures need to be appropriately -- it's not just a blanket wholesale 27 Transportation & Public Utilities implementation, but based on the understanding of the parties need to be reflected. As part of that, those dollar values will go into the overall financial health of the department.

All right. Well, why don't you hold that point right there. Does the Water Department wish to add to the record or provide some clarification? This is on the Bucks County matter. Please identify yourself for the record.

My name is Barry Davis. I am a divisional deputy city solicitor in the law department. Councilman Rizzo, I wanted to respond to you with regard to the nature of the Bucks County matter. The contract between the City of Philadelphia and Bucks County Water and Sewer Authority has provisions for the maximum quantity of wastewater that can be discharged into the City's sewer system. Under that 28 Transportation & Public Utilities contract, if Bucks County exceeds the limits for certain periods of time, there are penalties that are charged against the customer. In addition to that, there is under state law a requirement that the City must assure that there is capacity for development in Bucks County. So if someone wants to build a new housing development in Bucks County, they have to make sure that there's actually capacity in the sewer system for that. And in Bucks County, they would have to go to both the Bucks County Water and Sewer Authority and to the City of Philadelphia to assure that there is capacity. Because they have been exceeding their contract limits, there was not any additional capacity. And, therefore, the City in effect created a moratorium on issuing approvals for additional development in the Bucks County Water and Sewer Authority area. So there were two provisions 29 Transportation & Public Utilities that were in effect that were encouraging Bucks County to do something about these excessive flows. We had met with them several times and were not making much progress with our negotiations. Eventually, Bucks County Water and Sewer Authority elected to file for arbitration. There's an arbitration provision in the contract and they asked for arbitration. Once that arbitration commenced, this became a law department matter and I was very much involved in negotiations with Bucks County and with Bucks County's counsel in trying to both move forward with the arbitration and also to try to come to terms in some sort of resolution. We were ultimately successful I think as the Commissioner pointed out in part because other political leaders in Bucks County were able to more fully understand the situation that the Authority had gotten itself into, and the resulting settlement was an acknowledgment on the part of 30 Transportation & Public Utilities Bucks County Water and Sewer Authority that the City needed additional capacity in its wastewater treatment system in order to handle these excessive flows. And so what we came to was an agreement about a contribution from Bucks County Water and Sewer Authority that would help the City increase capacity both for the City and for Bucks County. So we achieved an advantage for the City in that settlement. I think some of the concern that the Commissioner has in terms of how this particular settlement is reflected in the rates has to do with the nature of that payment. The payment was specifically made with the idea that the majority of it -- I think the total settlement is close to $19 million, of which about 18 million has to do with this capital contribution to increasing the capacity of the system. And so the monies that were provided by Bucks County will ultimately be used in that capital 31 Transportation & Public Utilities function rather than as a general revenue function.

Thank you. Just for my own knowledge, I remember that part of the capacity issue in Bucks County was not necessarily raw sewage. It was when they had issues with storms and they had thunderstorms that came in that unfortunately got into the wrong system instead of into the storm water system. It got into the wastewater system, and they were really spending and giving us water that was relatively clean but still affected their contractual relationship with us; is that correct?

That's correct. And any additional flows that they would send us would mean we would have less capacity in our system to handle the storm water that we collect in our combined sewer system. I think it's important to note also as part of that settlement agreement we were able to have Bucks County take other actions with 32 Transportation & Public Utilities regard to addressing these revenue flows and we were able to put some additional provisions in the existing contract by amendment that would limit daily flows. Up until this point, the contract did not have a limit on a 24-hour flow and it simply said you can't exceed a certain amount. Well, the issue is really more complicated than that engineeringwise.

And the other issue, and I don't want to belabor this, was the fact that they needed to do something about part of the problem why this storm water was getting into that system. And I know I after conversation with the Commissioner made some contacts out there and they did not honestly understand the problems that they were having with their Authority and they were terribly concerned that they needed to fix the reason that we were getting this excess flow. And I hope as part of our agreement with them that they have fixed it and not just sending us water we 33 Transportation & Public Utilities really shouldn't be getting or sewage we really shouldn't be getting. I hope that was part of the process.

It is. And one of the difficulties with storm flow getting into sewer systems is that they are very difficult sometimes to find and to remediate. And it takes a very long period of time for that to happen. The agreement that we have addresses that issue by allowing them to have more additional capacity for a while and then reducing that capacity as time goes on in recognition of what should be their ability to identify and remediate their additional flows.

Great. Thank you very much. Appreciate that.

You're welcome.

Councilman, Mr. Chairman.

Thank you, Councilman. The only other question I have 34 Transportation & Public Utilities is there are some issues that have been raised -- and he will be up himself actually next. The City's Public Advocate has raised a couple issues regarding your report. One is about the issue of affordability.

Are you referring to the Public Advocate's exceptions?

I'm talking about the City's Public Advocate, Lance Haver, who will actually be coming up next. But I wanted to get your views on the issue of rate affordability as a concern as well as -- this is either a public policy issue or a philosophical issue having to do with possible suggestions in your report that it's possibly somehow okay if the Water Department might have been overcharged because ultimately there would be a refund back to customers. Can you comment on both of those issues?

I'll give you a couple of general comments. As far as my 35 Transportation & Public Utilities decision, it stands and it's self-explanatory, but in a general context, water rates are -- the bottom line, it's the cost it is to provide service divided by the number of ratepayers you have. Now, that doesn't mean that the Water Department should be complicit. It doesn't mean it should be inefficient. And it doesn't mean it has free reign to do what it wants. Part of this process is to make sure that it is operating in as efficient a manner as possible and for all intents and purposes at modern industry standards. With regard to the overall decisions that are made within that context, affordability, although it is a concern as a general rule of thumb and you do try to from a public policy point of view balance the affordability issue, especially in a city such as this, you are limited as far as to what extent you can go because you have to maintain the system. There is a cost. And once 36 Transportation & Public Utilities you've determined that everything is operating efficiently, that's your cost. You have several hundred square miles worth of a city and that infrastructure of several hundred square miles will service probably two to three times the number of ratepayers you currently have in it and at one time probably did.

Okay. So that's your response?

Yes, it is.

Thank you very much. Lance Haver.

Good afternoon. With your permission, I'd like to read my statement and be happy to answer any questions.

Just please identify yourself for the record and then proceed.

My name is Lance Haver. I'm director of the Mayor's Office of Consumer Affairs. Thank you 37 Transportation & Public Utilities very much for this opportunity. Let me start out by saying the obvious. No one wants to pay a higher water bill. Many families whose budgets are stretched tight have trouble keeping up now. It will be even harder for them after any rate increase. Raising the cost on the basic necessity of life for anything, including water, is a difficult burden for many. The hearing today can and should be more than a vocalization of the difficulties low-income families face making ends meet. While it's important to listen to those who are struggling, it is equally important to find ways to craft solutions. It would be great if all one had to say is the rates are too high and they would come down automatically. Unfortunately, that isn't so. I would urge Council to use the proposed rate increases not as a soapbox from which to give speeches but as a starting block to examine what can be 38 Transportation & Public Utilities done to eliminate the need for rate hikes now and in the future. I would hope that Council would join me in saying the premise used by the Hearing Examiner in reaching his decision was faulty. And I recognize the Hearing Examiner has said something different than he wrote, but in of the report in explaining how rates are to be set, it states, and I quote: Ultimately the test is whether the underlying revenue requirement reasonably reflects costs and most importantly that the end result is a reasonable one. Notably missing from his written word and written decision is the concept of affordability. Rates must reflect cost, be reasonable and affordable. Further, the suggestions on Pages 17 and 34 that an overcollection is acceptable because the Water Department is municipally owned is in my opinion also misguided. 39 Transportation & Public Utilities Also notably missing from the report is how to regulate and keep track of the rate stabilization fund and what should be done if the rate stabilization fund continues to grow. I would urge Council to reject both premises. Affordability does matter and rates should not be higher than needed even if the excess is refunded at some time in the future and the rate stabilization fund is depleted at sometime in the future. No one should have to pay more now with the hope of a refund later. In addition, it appears that the Hearing Examiner's report does not properly lower the proposed rate increase based on the recommendation it makes. 5 percent to 87 percent. This means that the Hearing Examiner expects the Water Revenue Bureau to bring 40 Transportation & Public Utilities in millions more than what was originally proposed. Typically, such a change in collection rates would lead to a reduction in the size of the proposed increase, but the report is silent as to how much the rate increase proposal should be reduced to match the increased collections. 5 million settlement that the Water Department reached with the Bucks County Water and Sewer Authority. And I recognize today you've been given different numbers of what the size of that settlement is. Again, I can only go on what the Hearing Examiner's report said and I do apologize. And just as importantly, the report states that actual costs of the last bond sale are unclear and gives the Water Department three months to recalculate the savings and reduce the 41 Transportation & Public Utilities proposed rates, but the report never states in what years the rates should be reduced nor does the report address the issue of rate stabilization fund and what should be done if rates are collected at a higher than accepted level. I believe the Water Commissioner is well aware of the difficulties that I have outlined and the shortcomings of the report. It is my hope that the Commissioner will lower the proposed rate hike based on an accurate accounting of the value of the decisions outlined in the report.

But what is most disappointing in the report is its failure to even discuss what can be done to lower rates. As I stated earlier, because the Hearing Examiner used incorrect criteria in examining the facts before him, the report fails to make necessary recommendations of what can be done to keep rates down. Council should work with the Public Advocate, the Water Department, 42 Transportation & Public Utilities community groups, and water consumers to develop such plans that would make water more affordable. Our goal must be continual improvement and efficiency. If, for example, I was given an opportunity to testify at such a proceeding, I would suggest that it is time to combine water revenue and PGW's meter reading, billing and collection, that the sheriff's office should be forced to release the funds that were collected through sheriff's sales for the Water Department. Council should not allow the sheriff to hold millions of dollars in tax, gas, and water revenue year after year after year that appropriately belongs to the taxpayer and utility consumers. Council should provide the Water Department with the resources it needs to attempt to market the technological advances it has made in processing water and the resources needed to see if it makes sense to sell more 43 Transportation & Public Utilities water or water processing to surrounding water utilities. Council should work with councils in other cities to build buying cooperatives for municipally owned utilities to keep costs down. An examination of such suggestions and others raised by consumers, workers, and technical experts would be in everyone's best interest. If these hearings lead to such discussions of how we keep rates down in the future, they will serve a worthwhile function. If they end today in a blame game, it will fail to help consumers. The problems we face are very real and they demand realistic solutions. Thank you for your time.

Councilman Rizzo.

Thank you for your testimony, Mr. Haver. You heard the Commissioner indicate that the record basically is closed. You pointed out that there may be some I don't want to 44 Transportation & Public Utilities use the word "flaws," but I guess they're flaws in the report. What could the Commissioner do to reopen that record and take into consideration some of the points that you're making here today? I mean, just because the record is according to the Commissioner closed, I'm sure that that could be reopened or delayed until accurate information is utilized to make a decision.

While I'm sure it doesn't feel like it to the Water Commissioner, I believe in his abilities. And as I said in my testimony, I really believe he saw these mistakes. There is a true-up mechanism that's recommended in the hearing process where there's not a dollar figure. The Water Commissioner is a capable man. I believe that when all is said and done, he will make the correct decisions on the numbers. It is awkward for me to say otherwise.

Well, I'll ask the Commissioner eventually to come 45 Transportation & Public Utilities back with his counsel to answer that particular question. The record's closed, but if there's obviously issues that you've pointed out -- or do I understand you're saying that when the decision is made it will -- he will take into consideration the points that you made today?

I really believe that. I believe we do him a disservice if we don't acknowledge he is an expert. The Hearing Examiner's report is a guideline. There are exceptions that have been filed to it. He weighs the Hearing Examiner's report and the exceptions. It is not a secret that the numbers don't add up. He is much better at it than I am. He will see that and know that. As he talked about earlier, how you actually account for the 18 million versus the 14.3 million are issues that he's well aware of. And he will be giving a decision. I don't for a second believe that the rate increase 46 Transportation & Public Utilities will be at the level that it's now at.

Mr. Haver, I read your testimony and I understand the issues that you've raised with regard to affordability and some of the other suggestions. I mean, is there for the matter that's in front of us or more importantly for the matter that's in front of the Water Commissioner in his rate-setting capacity, I mean, is there kind of a bit of bottom line to this? What's your position?

I cannot give you one unfortunately, Councilman. I don't think it would be realistic. I did not enter as a formal party because I am part now of the government and the government had hired an independent advocate, Community Legal Services. I don't think I would be a fair interpreter of those numbers. I am left looking at the process. For instance, I think we err when we don't write to every community group before the rate increase is filed 47 Transportation & Public Utilities and say, look, we have a very significant problem. We have a post 9/11 environment where we have to spend millions more on security. We have a problem where the state has cut back on the funding that it's given us. We have a requirement that we improve the quality of the discharged water. These are -- and we have a sheriff's department that refuses to give us the money that we're owed. In my opinion, what the process should have been to start was to write to every community group, tell them what's going on, invite them to the hearings, not take out an ad in the legal section 17 of the Daily News and Inquirer where we know most people don't read them but to work with the community to try to develop these solutions. That's the best I can get. I do think we have an opportunity here to recognize that there are very real pressures on the Water Department. And there are excellent men 48 Transportation & Public Utilities and women working there. But if we don't give them the tools they need, if we don't help them get around the fact they don't control the Water Revenue Bureau, we're really being misleading. As the Hearing Examiner points out, they don't control their own budget. The majority is controlled by Water Revenue Bureau, which is not under the control of the Commissioner. I don't know how we hold him responsible for somebody else's decision. It doesn't seem fair to me. So I think we have to look at the structural issues and say as well, you know, the Home Rule Charter has served us greatly but there are times when it has to be changed.

I think it's refreshing to hear you say that. Anything else? Thank you.

Thank you.

What I'd like to do if there's no objection is 49 Transportation & Public Utilities to -- we have a number of community representatives and I'd like to have them up at the table at the same time just for consistency, Pedro Rodriguez from Action Alliance, Devon Shaw from ACORN. Is there a representative from the Urban League of Philadelphia? And Naomi Zaslow from Hapco. Are you Devon?

Yes, I'm Devon.

Are you speaking on behalf of ACORN?

Yes, sir.

I know you have some other folks here, but they're not all testifying, are they?

That's right.

They are not testifying?

No. 22

They're just here to provide support. Okay. Before you get started, again, is there a representative from the Urban League of 50 Transportation & Public Utilities Philadelphia? (No response.)

And Naomi Zaslow from Hapco; Meg Greenfield, East Falls Community Council; Jim Foster, community advocate. Okay. Okay, Mr. Rodriguez, why don't you get started. Identify yourself for the record.

Good afternoon, Councilman Nutter. My name is Pedro Rodriguez. I'm the director of the Action Alliance of Senior Citizens. And I'd also like to say good afternoon to Councilman Rizzo. I'm happy to testify about the rate increase for the Water Department. Action Alliance was a party to the discussions and negotiations through our legal representation with the Community Legal Services, which is the Public Advocate on utility matters for the City. We were also involved in trying to steer some interest in participation from residents in the 51 Transportation & Public Utilities public hearing process. I have a written statement which I'd like to give you copies of, but I would like to concentrate on speaking about two specific things. One has to do with the affordability and how that impacts the well-being of the senior citizens and retirees on fixed incomes. And the second one has to do with what are we doing in trying to help people who are the least able to absorb a rate increase, what do we do to help and maintain a standard of living, make sure they are able to pay their water bills and don't go into delinquencies. Of the question of participation in the public hearings, you have to understand the particular situation that we were in when the rates were announced in this city and in this region. And I'm only speaking from the people that I work with, retirees and senior citizens. We were facing increases in gas rates at the time, 52 Transportation & Public Utilities seniors and retirees being the recipient of a constant assault from drug companies increasing the price of medications, you had changes in the suppliers of electricity, some of them having higher rates and people not paying attention to the changes being made for them and being assigned to companies that have higher rates, and within this environment here comes a Water Department rate increase of a whopping 43 percent. And most people that we work with just threw their hands up in the air and said what's next, what's going to happen to us? It's a constant demoralizing situation for many people. We managed to bring some individuals who are Water Department customers to testify about potential impact on their budgets of a rate increase. And even if you look at the average consumption for a residential individual, for a senior citizen, that will add approximately $7 to their billing cycle. And you're talking about 53 Transportation & Public Utilities anywhere between 87 to 90 dollars a year. For someone and for people in Philadelphia who are in fixed income and facing a number of other priorities in their lives, talking about $90 a year increase in their budget is really a difficult situation. We see individuals who have just no room and no ability to stretch their income for anything else. So this is going to have a really negative impact on their standards of living and ability for them to function. In addition to that, Philadelphia has a program to assist seniors who are low income to pay for their water bills. It's a discount of percent. However, this is one of the 19 best kept secrets in Philadelphia because 20 the Water Department does not do an 21 efficient job of promoting the 22 availability of the program to people who 23 qualify. And I think we believe that the 24 Water Department can do a lot better on 25 promoting the program and assisting 54 Transportation & Public Utilities people to enroll in the program.

Mr. Rodriguez, sorry to cut across you. Do you have any estimate as to how many people may be eligible who are not actually participating?

Based on the Philadelphia Corporation for the Aging just finished releasing a demographic study of the elderly in Philadelphia, we perhaps have 111,000 seniors in Philadelphia who fall within the guidelines of the Water Department program. We don't have an accurate number of how many people are involved in the program now. We usually get those numbers easily from the Philadelphia Gas Works, not from water revenue. We asked for the numbers a couple of times. We don't have some reliable figures at this point. The Philadelphia Corporation for the Aging demographic study just released earlier this spring also 55 Transportation & Public Utilities projects the increase of people who are 65 and over who are residents of Philadelphia for the next ten years. There's going to be an increase of people eligible for the program and a decrease of the people who are 65 to 75 and an increase for those 85 and up, which is the fastest growing population in the city right now. So there will be a larger pool of people who are homeowners who have accounts with the Water Department who will be eligible for the program. It is difficult unless they hear from us or from some of the other network agencies or offices of City Council members that this program exists for people to know they might be eligible to do that. In addition to that, Councilman, I'd like to add that the income guidelines for the program have not changed. Council just went through a revision to increase the income guidelines for the property tax, and I 56 Transportation & Public Utilities think it's about time that we revisit that particular issue. Thank you.

Thank you. Devon Shaw?

Yes, my name is Devon Shaw. I'm a member of ACORN, also a leader in the Philadelphia, PA, Neighborhood Chapter 1. My main concern is that a high increase of the water bill 11 that's going up that's going to affect a lot of people -- a lot of ACORN members in our community. By the bill going up affects that. If we're working on a low income, then we have to use -- we have to use our money to pay one bill like electric bill or maybe the gas bill or some other bill when we really can't even afford to pay the electric bill and the gas bill because their rates are also going up higher. And it's kind of inconvenient for us, especially for a person like me who is raising seven kids and have a real low income and have to buy -- I have to buy clothes and other 57 Transportation & Public Utilities stuff for my children and stuff like that. And ACORN understands that the water utility also significantly -- the state of funding support in the city. They reduced the support in the city that they used to have. The funding went down. And in the other states, they also modified the ability in 2001 that the water would either be shut off quicker and more faster outside of our community, which would affect where we're living at. If it started out there, then it's going to eventually come into our community. And I feel as though this is the wrong time for the water company to raise their rates because people is living under a certain income, a set income I should say, a set income. And if you're living on a set income that you know that you can't afford already that the bills are real high, the gas bills are high, electric bills are high, then you have your telephone bills that's a necessity, 58 Transportation & Public Utilities then you have the elderlies who need their medication and stuff like that, with a high water bill is not going to help us at all.

I understand. So you're opposed to the size of the rate hike?

Yes, opposed to the size of the rate, yes.

Thank you.

Thank you.

Mr. Jim Foster, community advocate, please identify yourself for the record.

Chairman Nutter, Councilman Rizzo, my name is Jim Foster, lifetime Philadelphia resident, vice president of the Pomona Cherokee Civic Council, a Germantown organization, business owner in northwest Philadelphia, and part-time journalist. I write a column for the Chestnut Hill Local. In any event, my purpose here today -- and I'm late to this issue. And 59 Transportation & Public Utilities the fact that I am late is I will cover in my purpose. I'm here to talk about process and procedure. Only recently becoming aware of this increase, the size of it, and the fact that it was purported to have been ongoing in community awareness, the statistics that were spelled out earlier that there had been three or four hearings with only folks 11 showing up I think illustrates a much 12 larger problem that should be addressed. 13 I can't talk about the technical aspects 14 because I haven't learned about them yet, 15 but it doesn't matter whether you spend 16 $50,000 putting newspaper ads in two 17 Philadelphia newspapers if we know, and 18 we doe know, that ads in newspapers no 19 longer reach the majority of the 20 Philadelphia residents. I have 21 statistics in front of me. Even with the 22 present circulation of the Inquirer and 23 Daily News, the proportion of that that is sold to Philadelphia residents even if every single person read the newspaper 60 Transportation & Public Utilities and read those rather condensed announcements, it could only reach percent of the total Philadelphia 5 citizens at best. This is the 21st 6 century. We know that people do not get 7 their news from the newspaper like they 8 did 25 years ago. I'm old enough to 9 remember the quote "Nearly everybody 10 reads the Bulletin." Well, we don't have 11 a Bulletin -- well, I guess we do. We 12 have a Bulletin again and that's probably 13 a good sign. The problem is that that 14 method of announcing a significant change 15 in the cost of a public utility is absolutely irresponsible. If you want to reach the majority of the folks with this information, there should be a filler in the bill, not something that's so small that a senior citizen would need a magnifying glass to read it but something that falls out the way a past due notice does in bright pink with big letters that says public hearings soon on significant rate increase. The percentage of this 61 Transportation & Public Utilities rate increase has been described depending on who you talk to as somewhere between 32 percent and 43 percent. And that might be something you have to decide on whether you're talking commercial or residential or some combination. The point is the vast majority of Philadelphians did not know about this. I do not think the water bureau can hide behind the fact that they used obsolete methods to inform folks. If I wanted to get to people, I'd put it in the SEPTA Metro. I'd bet more ratepayers read that in a week than read the major newspapers. In any event, I think that considering the fact that this is a significant increase, considering procedures followed are inconsistent with the way we live and learn about things today that it's time to take another look at this.

I think you've made a very good point. I think 62 Transportation & Public Utilities that should be something even though the charter requires a certain type of advertising that it would not have been a bad idea for them to put a stuffer along with the bill to let the customer base know that there were going to be hearings. I think that they did what they had to do to conform legally. And you're right, it may be at this point an obsolete way to do business, but even with that said, the additional step, I don't know and the Commissioner -- I'll ask the Commissioner when he comes back up to the table was that done. Are you suggesting that there was nothing included in any of the normal communication with the customers?

I have not been able to find any evidence of that kind, which would have been a very rudimentary way of alerting folks, has taken place. I agree with Mr. Haver being part of a community group that is fairly active and there are quite a number of them 63 Transportation & Public Utilities contacting community organizations with some degree of spelled out detail. Now, nobody's going to digest a 52rundown.

I'm not suggesting that they didn't want the customer base to know, but conforming --

Possibly I am.

-- conforming with just the letter of the law to advertise to satisfy the law and not going the extra steps could be a management decision. You know, they don't want people rocking the boat for their organizations. So I think that maybe where we need to go from here is that the City's consumer Public Advocate is going to have to communicate with the Water Department in the future and any other department that can affect rates, that they need to communicate with them above what the law requires. The natural way would be to put that bill stuffer. They even have a system now where they 64 Transportation & Public Utilities can call people on the telephone and make announcements, the city can, in snow storms, et cetera. So it's not that they can't do it. It's do they want to.

I agree with you, Councilman. Meeting minimal requirements I think in this case falls way short of obligation. You know, there's a triumph here of obsolete procedure over prudent responsibility. And as far as I'm concerned, if this is going to be automatically granted in a few days, maybe injunctive relief is necessary.

That's what we need to find out when the Commissioner comes back. What Mr. Haver said is important. The Commissioner is an expert, one of the best at this. And whether or not the record needs to be reopened, that may need to be the case. And there probably is a procedure to do exactly that.

Thank you for the opportunity. 65 Transportation & Public Utilities

Thank you. Mr. Rodriguez?

Pedro Rodriguez again. I had I didn't give you an exact number in terms of the number of residents that we believe will qualify for the rate. According to our calculation and based on the Philadelphia Corporation for Aging report, it should be between 79,000 to 83,000.

79?

To 83,000.

Would be eligible, okay. Hopefully, in a few minutes we'll find out how many are actually participating. Yes, sir?

I have to quote on something I forgot to quote on. I took my 2-year-old daughter -- she's not really 2 yet. She's almost 2. I took her to the doctor. The doctor diagnosed her with low lead in her blood. They said it was coming -- you can get lead. 66 Transportation & Public Utilities Lead is in the air. It's like little thin dust is in the air so it can get into the water. So drinking the water is really not safe for you. You have to let cold water run two to three minutes in order to decrease your lead count that's in your body. So right now me and my family, we try as much as possible not to drink the water from the spigot. He says the hot water is even worse. You have to let that run even longer because of the lead that's inside of the water.

Well, I am neither an engineer or a doctor, but I think the lead issue in the water in your house may be more related to the pipes in your house quite possibly than what's in the air.

Okay.

So you may want to conduct a home lead test. You can get those kits from the like hardware store or one of those kinds of stores. But I would tend to think it's less about 67 Transportation & Public Utilities what's in the air than what's right in the pipes in your house. You might want to check that out.

Okay.

Switch over to copper. Thank you. Thank you all very much. Commissioner, normally I would not do this, but for consistency with regard to the record and some of the issues that have been raised, why don't we have you back up to talk about a couple issues that just came up. I'm not going to hurt him, Barry. Come on.

Good afternoon, again. I'm Bernard Brunwasser, Water Commissioner.

First, Commissioner, let me just advise you as you continue to receive tremendous praise from a variety of people about your expertise, in these kinds of proceedings that may potentially be damning with 68 Transportation & Public Utilities faint praise. It will only come back to haunt you to be considered an expert under these circumstances. Having said that, a variety of issues have been raised with regard to, for instance, the advertising of these required proposed rate increase hearings. Can you tell us what steps the Water Department took to provide maximum advertising exposure with regard to these hearings?

Yes, be glad to. I can read what -- you know, where the ads appeared. And they were in ten publications.

Why don't we start with this: What's required, do you know?

I believe that the --

Here comes somebody from the back. Don't worry about it. Reinforcements coming.

It's a charter requirement and it's that the publication 69 Transportation & Public Utilities be in two papers of general circulation. That would mean that they are paid --

Is this a code requirement or Home Rule Charter requirement?

I believe this is a charter requirement.

Two publications of general circulation?

That's correct.

How many days in advance of the hearings?

Ten days.

Ten days, okay. And did these ads end up as they often do on like back where there are employment notices and City Council hearing notices and, you know, you can buy a car, buy a dog, and do a whole host of other things? Is that where they probably ended up?

Generally speaking, we've attempted to have them --

Just take a 70 Transportation & Public Utilities seat. Be comfortable.

I don't know how much control we have on exactly where they're placed.

Just trying to understand.

However, they are relatively large. And we've certainly gotten away from the little legal notices that you may be familiar with. And so we do make an effort. We wanted the public to be aware of these hearings.

As far as you're concerned, you met the statutory requirement for advertising?

Yes.

Now, tell me anything else that you may have done beyond the charter requirement with regard to public notice or information.

We put the hearings and the locations on our web site. 71 Transportation & Public Utilities

The Water Department web site?

Yes. Also, we published in ten publications and not just the two that are required. And I can quickly read that off to you.

Go ahead.

The Philadelphia Inquirer March and 21, 11 the Philadelphia Daily News March 17 and 12 21, the Philadelphia Tribune March 18 and 13 25, the Public Record March 24 and 29, 14 the Germantown Courier March 23 and 30, 15 Mount Airy Times Express March 23 and 30, 16 the Roxborough Review March 23 and 28, 17 University City Review on March 23, Al Dia in Spanish March 27 and El Sol also in Spanish on March 30. There were some newspaper deadlines which did not allow us to have two ads in those last three papers, but we did get one ad in.

Okay. Is that it?

I think so, 72 Transportation & Public Utilities yeah.

You mean you did not place an ad in the Fallser or --

I apologize for that.

-- or the Chestnut Hill Local? Commissioner, what is the issue here?

I'm from the northeast. That explains it.

News Gleaner? Did you do the Gleaner?

It should have been there.

What about the suggestion and -- I mean, I think that it is well within the norm because we get other stuff. Anything in whatever the billing cycle was that particular month, anything put in the bills, or is that not your side of the house?

Right. We certainly would like to do that or would 73 Transportation & Public Utilities have liked to have done that, but oftentimes the timing of bills and the timing of the setting of these hearings are such that preclude you sometimes from being able to get that kind of information out quickly enough through the billings. I mean, obviously if we had enough time, if we knew long in advance when the hearings would be held, we certainly could have created a bill 12 stuffer or --

Let me ask this question: There's been reference made to this bifucated process, which I months ago actually knew that it was bifucated although quite honestly that was eight million hearings ago so I can't remember why it was bifucated. I mean, at some particular point you know that you're going to have hearings. And it would seem to me that if for some reason, whether it's advertising deadlines, billing cycles, and a variety of things kind of intervene so as not to avail 74 Transportation & Public Utilities themselves, I mean, the next logical thing to do maybe is to push the hearings back. Was that considered? I mean, there was no statutory deadline for any of this, was there?

We certainly had an issue with timing on the fiscal 2005 rates and that had to be fast tracked. The process already as it's constituted takes a good six months or so at best. And to add further weeks may affect, you know, the actual date of implementation. In other words, we would have liked to have implemented these rates on July 1, but we ran out of time.

I remember. It became a point it was clear that was not going to happen. So at that point, I mean, you know, it's like you just kind of deal with the hand that you've been dealt. And we knew back a little earlier in the technically last fiscal year it was never going to happen July 1.

Correct. 75 Transportation & Public Utilities

I mean, I think when these hearings started we pretty much knew it wasn't going to happen July 1. Did you send anything or work with personnel? For instance, did we get anything in our pay envelopes about these hearings?

No, we did not.

Could you look at that as an option as well? That's plus thousand people. Then 14 we've got the School District. I mean, 15 part of the point of all this is -- I'm 16 not going to beat you up for past 17 actions, but we'll certainly help to 18 inspire you for the future. I mean, 19 there are any number of ways for us to 20 communicate with people. And as exciting as the Water Department web site might be, we might also want to have this just on the general City web site. There are any number of things that come up on that first screen, you know, kind of right 76 Transportation & Public Utilities there next to the Mayor's picture that water rate hearings might actually catch someone's attention. So I understand your statutory requirements and, you know, if there are other ways through the code that we might provide some additional notice -- I mean, high rate increase, low rate increase, whatever it is, process and procedure is critically important. Maximum notification I think should be our watch word. And you're going to get whatever you're going to get at a hearing. And I think, as you indicated, you're not at the hearings anyway; right?

Not anymore, no. 19

So someone gets hired, the gentleman in the back. Hopefully, he is paid well and he'll hear whatever he's going to hear and they'll throw whatever they're going to throw. You just kind of deal with it and he'll be happy because he's providing a good 77 Transportation & Public Utilities public service. And we'll have maximum notification. And if no one comes, that's kind of the way it goes. But you want to be in a position where virtually every ratepayer directly or pretty close to directly gets as much notice as possible. Then people will make decisions for themselves. Councilman Rizzo.

Thank you. Looking at the notice, the notice, first of all, it's a typical notice, but the way you've presented this to the public, effective date, additional monthly charge, total monthly bill, percentage increase, we talked about a 40-plus percent increase over three years. How did you come up with the figures, the percentage of increase?

These particular figures do not include the 12.8 percent that was decided back in January and then went into effect February 1. 78 Transportation & Public Utilities

Because this doesn't really -- you know, you referred to this as significant. You look at this notice, this notice doesn't appear to be significant.

Well, the original set of increases if I'm remembering these correctly were along the lines of 9.7, et cetera, but pretty much 9 and a half percent each of the four years. Now, you have to remember, of course, that was with the supposition that lateral -- new lateral service would be part and parcel of that. So the lateral service came out, which, of course, lowered the 43 percent overall percentage. And, please, I don't know what that lowered it to. But you had that and you've had these other economies, some economies that have been recognized during the course of things, and this is what is outstanding at this point in time. And this is what I will have to now opine on. 79 Transportation & Public Utilities

Commissioner, the point that I want to make is the fact that it sounds like we have such a rigid system here. We have a Hearing Examiner that I believe is flexible enough or reasonable enough to work with you to give you or whatever, if it's revenue, an opportunity to decide on hearing dates to give you an opportunity to appropriately advertise and not have the situation that you described today, up against it, not being able to get in this paper. Why couldn't there be a better relationship with the scheduling process with the Hearing Examiner to work out an accommodation that allows you to properly communicate?

I think it's certainly something we would look at the next time around as a way to improve. This is a process that has been around for about 13 years. And I would say that it has seen improvement over time and we do a much better job now. Insofar as the 80 Transportation & Public Utilities ad size, for example, I personally was out at one of the libraries about 1990, 1991 and 250 people showed up and we probably had legal size ads in those days. But the problem was we had a very, very high increase that was required at the time.

My last question before I give it back to the Chairman is we constantly referred today as the record being closed --

Yes.

-- that you can't discuss a lot about what your decision will be. What can you do as the decision-maker to reopen the record if necessary, to delay your decision? What can you as the Commissioner do to allow more time for that record to be reopened? You heard that legal action -- I hope that wouldn't be necessary. What can we do to give you more time if you need it to gather more information?

This is a 81 Transportation & Public Utilities question for my attorney, I believe.

Councilman Rizzo, the process that we're involved with comes from three sources. It's the chatter and the code that was established by City Council and regulations that were developed pursuant to the code. The process is designed so that there is an end point, that the Commissioner has the ability to have a record in front of him that has been developed very carefully through a series of both public hearings and other hearings that are open to the public but which we referred to as technical hearings because they tend to be much more like a trial with various experts and attorneys questioning the experts. Those are also open to the public. The process of developing this record includes transcripts that are developed both in the public hearing and for the technical hearings. The parties who have decided to join formally in this 82 Transportation & Public Utilities process -- and the way they do that just as a point of information is the way they would do it for any regulation. If you are a person who takes issue with a regulation that the City has created, you basically send a notice to the records department indicating that you are aggrieved and that you want a hearing. And that's how people become part of this hearing process. So we had I believe four parties that formally or was it three -- I think there were three formal parties, and each one of those parties then was given an opportunity to participate very fully in the technical hearings. There's a whole series of measures that are taken in the course of the regulation for allowing those parties to present their views, including presenting evidence, providing witnesses. At the end of the hearings, they then can file briefs. They can file reply briefs to the briefs that are filed. And at that point the record is 83 Transportation & Public Utilities closed with regard to the evidence that has been allowed to be brought in, at which point then the Hearing Officer reviews that entire record. And I am assisting the Commissioner in the review of that record currently. I know there are at least four file boxes of evidence and briefs. It's a voluminous record. At any rate, the Hearing Officer then has that record in front of him to make his decision. As I said, each party has had not only an opportunity to take a brief but then to take issue with another party's brief. The Hearing Officer also in consultation with the Commissioner allowed each of the parties to file 19 formal exceptions to his report so that once the Hearing Officer's report was published, even though the record is now closed, each one of the parties had an opportunity to basically reiterate the arguments that they had in relation to the Hearing Officer's report. So there 84 Transportation & Public Utilities is an exception that was filed by the Public Advocate. In this case, I'm referring to Community Legal Services and also by a consortium -- an attorney representing a consortium of commercial customers that participated fully in the hearings. So that record is now before the Commissioner. The Commissioner will review all that. He will look at the exceptions as well. The exceptions don't bring in new evidence. They simply give those parties an opportunity to restate their views on the evidence. With regard to what the Commissioner can do today, I think actually Lance Haver put it quite well. There is a voluminous record and all the issues that Lance raised are in that record. They are in that record now.

But, counselor, you saw my reaction. Lance saw them. Did you see them?

We are reviewing 85 Transportation & Public Utilities the record.

My point is the fact even after your review you could have missed some of the points if we didn't have this hearing today.

I think it's unlikely that we would.

Okay. That's fair. The right answer anyway.

Because the process is such that Community Legal Services with very able counsel presents that evidence to the Commissioner in the form of the brief that is filed for the Hearing Officer's process. So there is a brief from Phil Bertocci, who is counsel for the Community Legal Services. There is a reply brief and then there are exceptions that were also filed by Community Legal Services. So there are many, many opportunities for the Public Advocate to direct the Commissioner back to the record and to point out whatever failings there may have been in the 86 Transportation & Public Utilities review that was done by the Hearing Officer.

Well, some of the points that Mr. Haver made today, can you answer the question were you aware of some of the points that were made today prior to them being stated here at the public hearing?

By and large, yes. I can't specifically say that every single one of them, but I know that there is evidence in the record with regard to many of those issues. With regard to the Bucks County issue, there's plenty of evidence in there about the fact the money was received and what are the implications of that money. And each party would have a different view about how that money should be treated. I think one of the issues that's come up today that is not easily addressed and may not be fully reflected in the record would have to do with this affordability issue. And the direction 87 Transportation & Public Utilities that the Commissioner has is essentially what is in the City code with regard to how the rates should apply to customers. Basically, we have a charge that says that they have to be the same as they affect each class of customers. So if you have a residential customer, we don't have a provision in our code right now that says that we can treat low-income customers differently than we can treat other customers. We do have a provision that says that certain senior citizens can receive a discount if they're income-eligible, but we don't have that same provision with regard to other customers. I think that would have to be a direction that would be received from Council in terms of how it is -- what are the factors that the Commissioner takes into account when he sets the rates.

Counselor, in all fairness, for the record, months and months and months went by before there was even a Hearing Examiner 88 Transportation & Public Utilities appointed. I think how Commissioner -- July 1 was a date, but I believe it was even supposed to be before July 1. How many months are you actually truly behind on this request for this rate increase?

The initial rate increase -- the initial rate announcement goes back to January 2004. And we did achieve the rates for 2005, fiscal 2005, on February 1.

Thank you. Mr. Chairman.

Commissioner, when you say you achieved the rates for 2005 on January 1, when did you want to have those rates in effect? July 1, 2004?

Oh, July 1, 2004, which is fiscal 2005. And the date actually was February of 2005.

So you wanted to have the first increase go into effect July 1, 2004, which is the beginning of the FY '05 fiscal year, 89 Transportation & Public Utilities which ended up not taking place until February 1, 2005; right?

Correct.

Can I just add something to that, Commissioner? Are you in your decision going to try to go back and collect any of the money involving the delay? Is that any part of your decision to go after any of that?

In effect, we took care of that with the initial increase. We had to make sure that the water fund was made whole for fiscal 2005. So that percentage increase instead of being spread out over 12 months had to be punched up or, you know, compressed I should say.

So you calculated that in there?

Yes.

So it's in there?

It's already taken care of. 90 Transportation & Public Utilities

So we really didn't benefit by the delay? That's fine.

Commissioner, one other issue that was raised earlier about the program for low-income customers or seniors, rather. The issue seemed to revolve around the number who are eligible versus the number who participate. Do you have any data on the number of participants?

Yes, we do. It's approximately 35,000.

Okay. You heard Mr. Rodriguez testify earlier that based on a Philadelphia Corporation for the Aging report there could be upwards of 79,000 to 83,000, which is at least double the current participants.

Right. I'm assuming he's talking about households and not individuals because obviously --

I don't know. 91 Transportation & Public Utilities

Obviously, a senior household is how we look at it and it may affect more than the 35,000 households. There may be 50 or 60,000 seniors affected by 35,000 accounts.

Are there any plans -- I don't know what your level of control is over this. Does the department promote the program or does water revenue promote the program?

I believe people sign up through the Water Revenue Bureau. I stand to be corrected. And I can say that we certainly can make a stronger push in this area. Also, I want to mention that over the years since this program first began in 1974 -- I'm looking at Councilman Rizzo because you may know who was responsible for this program by looking at the date. Anyway, since it started, we have had a CPI -- we have a means test and we've had a means test since the early 1980s. And that gets raised with CPI. And currently it 92 Transportation & Public Utilities stands at $26,100. When the final rates or actually the final CPI figures I guess for this past month come in, they will be bumped up to a little bit higher level, whatever, you know, for this past period. And so that will be a little bit higher threshold for people to get under.

Could you work with or at least meet with Mr. Rodriguez to go over this eligibility versus participant issue and how we might be able to increase participation?

Sure, that would be my pleasure.

Thank you very much for the moment, but try to stay in the room if you can.

Thank you.

Meg Greenfield, East Falls Community Council; Bishop Leonard Goins, Chestnut Hill Church of God; and Marty Brill from Upper Norwood Community Council. If they could all come up, that would be wonderful. 93 Transportation & Public Utilities Is there a Bishop Leonard Goins? (No response.)

Is there anyone else whose name I have not mentioned who wishes to testify? If you would be so kind as to identify yourself. Is it Ron Chojnacki and Jerry McGovern? Okay. I'll have you up next. Ms. Greenfield, please identify yourself for the record.

My name is Marjorie Greenfield. I am first vice president of East Falls Community Council. And I really appreciate the heads up I was given yesterday about this hearing and the rate increase. I want to talk a little bit about the notice question. I'm a lawyer. I don't read every legal notice in the newspapers. I think it would be most effective and simplest if there was a notice printed on the bills as soon as the department 94 Transportation & Public Utilities started to consider rate increases saying we're thinking about raising your rates, please check our web site, please watch the papers, we will continue to inform you as this progresses. It might even say there's an enclosure with your bill 8 so look at it this month even if you don't usually do it. It's not very difficult. I'm not interested in what the legal requirements are. I want to know what's going to be effective. I don't read all the enclosures that come with my PECO bill and gas bill and my Water Department bill all the time, but I do look at the face of the bill and look and see how much I've used and what the amount's going to be. And if anyone's going to look at anything, that's what they're going to look at. And if you really want to get people on board with this and have them know what's happening, that's a very easy way to do it. The other thing I'm concerned about is the failure to contact community 95 Transportation & Public Utilities leaders. I certainly received no 3 information and I don't believe that our president received any information for East Falls Community Council, and I know also that there was no publication in our monthly newspaper. Now, we have a web site. I know the department has a web site. And today I went looking for information about the rate increase. Well, first of all, I would never have looked if I hadn't known about it in the first place. Secondly, it's buried about four layers deep. You have to get to the press releases and then you have to read down and you have to read through the description of the Water Department's rate increase, and then there's another document attached to which it refers which says initiatives and that is where we find some of the justification for the increase. So I took the time to look at the initiatives and I find it sort of interesting. And I think this relates as 96 Transportation & Public Utilities well to the increased cost of security after 9/11. There's a waterways restoration program. And I think that's great. I think it's wonderful that we are restoring the waterways to clean up our water, but why does the department have to include that cost in its rate base, which is regressive? Why does the department have to include the cost of homeland security measures in its rate base? That's regressive. We all benefit from that. It ought to be in the general tax, come out of general tax revenues, which is a lot less hard on people who can least afford this kind of increase. The Water Department is also involved in advanced regional source water protection plans. And it was funded in part by a grant from the Pennsylvania Department of Environmental Protection, and other partners included Aqua Pennsylvania, Pennsylvania American Water Companies. Now, they know what the issues are about the watershed. Again, 97 Transportation & Public Utilities since this overlaps with all kinds of concerns about pollution and not just supplying clean water, it seems to me that this is a cost which should not be part of the rate base. It just isn't fair to the people who can least afford it. Now, I guess I should put on the record that East Falls is a very diverse community economically and otherwise. We have people in Section 8 and public housing and we have people like our governor and judges and Senator Arlen Specter and everybody in between and maybe above in terms of income. So we're concerned we have a lot of senior citizens living on fixed incomes. This makes a difference to them.

And these people should have known about it and we didn't. And I read the paper. I listen to NPR. I read news on web sites every day. I didn't get it. I didn't get any effective notice. So I think there's one 98 Transportation & Public Utilities fundamental problem here in there's no 3 effective control over the Commissioner. He makes a decision. I understand it's based -- he will get a recommendation from the Hearing Examiner, but I've also been told -- and correct me if I'm wrong -- that he doesn't have to follow that recommendation. I don't know and it's a question I'd like to ask whether there are specific clear financial criteria which have been set and standards which have been set as to what should or shouldn't be included in the rate base. Is there anything there which talks about things such as homeland security? Yes, it affects our water, but why should that be in the rate base? Are there ranges within which the predictions of income have to be accurate or expected to be accurate? I understand that there are collection problems. It's not like the Philadelphia Gas Works, but I'd like to know who the most delinquent customers are, not talking about the people who 99 Transportation & Public Utilities can't afford to pay but the people who just don't pay, and what efforts are being made to collect that money. I'd like to see the names of the top ten or hundred top delinquent people published. I'd like to know which of those are commercial owners, owners of multifamily properties. We shouldn't be bearing the cost of their delinquencies. And I would appreciate an answer to that question about what's being done about it. I know there are collection efforts and the accounts are sold, but who goes after the big guys? I understand there's a rate stabilization fund. And Mr. Haver may have talked about some of this before. A lot of this is very new to me, but I understand it's growing. If that's not legally required, why is it growing? Is it growing because there are underestimates every year of how much money is going to come in through bills? And if that's so, why is the department 100 Transportation & Public Utilities underestimating every year? I won't talk about the sale of water to the suburban counties because I understand that was addressed but I do hope that to the extent the Water Department is providing what is essentially a capital benefit to the counties that the counties are paying adequately to cover their share at least of that benefit. And an expert who was engaged to determine whether those rates paid by Bucks County, for example, are accurate and appropriate maybe shouldn't be somebody who is also serving water companies in the burbs, whether public or private, because you know where their bread is buttered. I'm not saying they did anything improper, but it just leaves me with questions. Finally, I understand that Mitchell & Titus did a report last year by way of uncollected funds being held by the sheriff. Frankly, I've never understood how that can happen in the 101 Transportation & Public Utilities sheriff's office, almost $25 million being held because they don't know what to do with them. I don't know whether that situation has changed since the year that I think was early 2001 was reported, but certainly the sheriff can't say and the Water Department shouldn't be saying we didn't know that the money was sitting there and we didn't know that we owed it to you. I mean, that money gets there because somebody initiated a foreclosure sale, a tax lien sale, something. So those people know the money is there. My personal experience with the sheriff's department is I had a client who had over $500,000 as a result of a sale and it took a lot of effort to get the money from the sheriff's office. And I never did get access to a statement of distribution. I don't know whether it was filed or not.

But I think there's a problem there and I think if the Water Department has any money sitting with the sheriff, there has to be a major effort 102 Transportation & Public Utilities made to pry that loose. And I'd like to know whether that is still the case. Mitchell & Titus apparently reported that it was. Maybe we've had an answer already and I've missed it. I would really like to know because that makes a difference on the rates and we shouldn't have to pay for that. And it's not money that's earning interest. I would ask that further rate increases be postponed until all of these questions are answered and satisfactorily answered and that there be further discussions with the customers. The department is supposed to serve and the department is part of the City. It's not a private company. There's no 19 competition. You can't even get the kind of competition you get from electric companies or phone companies. And the department owes it to its customers who are only customers in a very different sense from the retail environment to contact community organizations, find out 103 Transportation & Public Utilities what's going on, find out what community concerns are, and have a more transparent procedure that provides a lot clearer and fuller information to the public before rates are increased. And I thank you for the opportunity today.

Thank you. Mr. Brill?

Councilman Nutter, I'm sorry that I didn't include you in my written discussion.

Well, Mr. Brill, if you haven't included me in your written comments, then I can't listen to them.

Okay. All right. The point is well taken. When Councilman Rizzo's office called yesterday, it's the first I had notice of it or when my wife did know about it. And she probably would have been done here except for the fact she had to be at another spot. So I was interested in coming down and giving a 104 Transportation & Public Utilities little bit of hell to Mr. Brunwasser since I was formerly in the city administration as you well know.

Yes.

I'm only interested in one particular thing, which I view as a microchasm of the problems that the department has had in construction. They seem to forget how to close and finish a particular job. And it drives me absolutely bananas. The one in particular that I'm talking about on Whitaker Avenue, that has been ripped up about 15 times over the past 20 years and they still haven't figured out how to do it right. And I think they're using Band-Aids for making the repairs. I'm sure --

What's the location, Mr. Brill?

It's Whitaker Avenue from Magee to about Longshore, but the first opening occurred because of a break at Whitaker and Kerper. 105 Transportation & Public Utilities

This is a water main break?

Water main break. Then there was another -- apparently whether they switched something around or not, another one broke at Longshore. Then they built a ditch from Kerper I guess it is up to -- from Knorr to Longshore at the west side of the curb, and that's still open. In fact, it's crumbling again. And all these patches are there, but -- and there's buses traveling over the area. Go ahead.

Mr. Brill, I don't mean to interrupt you, but I totally agree with you because right now I'm looking into the entire process of how it is so complicated when a department or a plumber -- if you knew what a plumber --

Councilman, I know about it. Remember, I was with your father's administration.

I knew I 106 Transportation & Public Utilities liked you from the very beginning. But my point is yes, and it is such a complicated process. We have a plumber that opens up an excavation. They're supposed to restore it temporarily. All they do is shovel the material back in. We get a rain storm and then all of a sudden you see a pile of wheel covers on the side of the road where people's vehicles are damaged. I just can't figure out why all these years -- since I've come to Council, I've been talking about this coordination. And they just can't figure out how to fill a hole properly, appropriately after they dig up the street. I don't know why it is so complicated, but I think the Commissioner wrote down that location because it's pretty much out of his hands.

He knows I'm going to be after his hide.

Well, I don't know why it isn't the responsibility of the Water Department to 107 Transportation & Public Utilities go fix the holes that they open, but they turn it over to the streets department, it takes memos to get a by 2 repair job done. And I don't think it's about unions. I don't think it's about that. I think it's that nobody ever has focused on the process.

I think it's a lack 10 of followup in the department. 11

I think it's 12 exactly right. I think it's part of the 13 process too. 14

If we had holes like that in Center City when we were doing construction on the commuter connection, everybody would be killing me. It was bad enough when we had a water break right here at the entrance to the building, MSB.

I want to remind you the commuter tunnel is one of the best assets the City has ever had.

We had a long fight on that if you recall. 108 Transportation & Public Utilities

I know. Thanks for steaming me up a little bit. I was getting a little tired. Now I'm all back. That's one of my things too about that particular issue and I'm looking into the entire process.

It's all over the city.

It's a mess. It's a mess. And it's terrible when some person hits one of these depressions that weren't repaired properly. And, as a matter of fact, up in the northeast I was coming over Rhawn Street just the other day where they dug a ditch across Rhawn Street just east of Dungan Road, a disgrace that that contractor was allowed to let -- it had traffic backed up for three blocks. You're shaking your head. I think you know what I'm talking about. Thank you, Councilman Nutter.

I appreciate the ability to talk. Thank you.

Thank you 109 Transportation & Public Utilities so much. I think you'll probably see some action on that.

I'll send you a detailed note apologizing.

No problem. Mr. Chojnacki and Mr. McGovern. MR. McGOVERN: My name is Jerry McGovern. I'm a citizen of Philadelphia, 3,000 block of Almond Street. I'd like to continue where we left off on the closing up of the street properly. We've recently had a child hurt on the street who fell into a sinkhole which started out maybe at 6 inches and has grown now to about 36 inches in diameter in a short amount of time. I'm there 13 years and in that entire 13 years the street has never been correct. We have sinkholes that repeatedly pop up. I work for a company in the city here and if I treated my clients that way and said, oh, by the way, I haven't finished any of my work yet I have to raise my rates and, by the way, part of the expense of repairing 110 Transportation & Public Utilities this is now yours -- because most of the residents on our block have violations for lateral replacement that were broken due to the Gas Company coming in and replacing lines. It just doesn't seem right to me that I would have to -- you know, there's a rate increase out there that we have to absorb.

If you really have any significant immediate hazards out there, please let us know. MR. McGOVERN: I'd like to go on the record saying we have an immediate hole that a child can easily fit and now a large adult can fit in.

My aide's here. See this young man and give the location and we'll get the streets department to address it. Part of the problem is there's too many hands involved in fixing a simple ditch that's either dug up by the City, by the Gas Company, by the electric utility. And just recently I heard -- the first I 111 Transportation & Public Utilities heard it was on the news was the fact that now the utilities are going to start talking to each other before they start digging up the street. Well, that's genius that they would talk to each other before they start digging up the streets, but we'll get into that. And this is going to be another issue that I try to resolve before I finish this career in Council. But you give this young man the information after the hearing. Continue, I'm sorry. MR. McGOVERN: That's pretty much it. I would like to add about the notification of the rate increase, about the notification of the hearings, if they would simply deploy the same tactics they deploy when they want to let you know you're late with your bill that there's going to be a hearing, you'd need a bigger room. A lot of citizens on my block found out yesterday because the condition of our street got to the boiling point where everybody was out in 112 Transportation & Public Utilities the street complaining and that's when we found out today there was a hearing to increase our rates almost 43 percent.

I think what you are experiencing -- it's no 7 disrespect to the Commissioner. I think you're experiencing a minimum amount of communication that -- MR. McGOVERN: I'm not here to say whose fault it is, and I'm not going to pay any more money.

We agree with you something needs to be done above and beyond what the law requires and maybe eventually we'll be able to figure out a way to get a better form of communication rather than this ad that needs a little bit more work. Certainly, it's not what I open the paper to read. MR. McGOVERN: We live in the age of information technology nowadays. It's pretty easy. You can get a message to China in five minutes if you'd like.

Thank you. 113 Transportation & Public Utilities

My name's Ron Chojnacki. I am also a resident of the 3000 block of Almond Street. We had a water main break back in January, actually on New Year's Eve. And a swimming pool size hole was dug. How long did they work on that for, Jer? MR. McGOVERN: Months.

Two, three months the work was being done on it. It was just filled in and temporarily patched and left.

Gas?

No. This was a water main break. Now, with the problems that we've had and the ground underneath these pipes, this is what we believe is causing all our problems, these sinkholes. We have like he said a gaping hole in the street. We have a few of them actually. We've seen rats. We've had a child fall into the hole now. Now we have health risks. Something has to 114 Transportation & Public Utilities be done about it.

I'm a Councilman-at-large. I represent the entire city. Councilman Nutter, it's not his district. I assure you, we will get a supervisor from the streets department. We're going to make sure that after the hearing we know how to communicate with you. And I'm going to ask the Chairman just to have the Commissioner before we end this today to comment on why we just can't get a very simple task -- you dig up the street, fix it properly. And one of the problems -- you know, I don't refer to potholes anymore because most of the holes that I experience in our city aren't natural decay of the roadway or failure of the roadway. In my opinion, the majority of the holes that I encounter that are damaging to a vehicle are a result of a repair that was not done properly. And if you're not watching the contractor and you're supposed to put 4 inches, they put 2. It 115 Transportation & Public Utilities lasts for six months, a year, and then you have the problem. It's a damn shame when some man or woman hits one of these at o'clock at night because you can't 6 see as well, you bend a wheel, you blow 7 out a tire. It's just not -- and we have 8 too much of this. You ride through 9 Center City, you need -- what's that big 10 truck that people ride around in, Humvee? 11 You need a Humvee to get up some of these streets. It's amazing. A majority of it is because they're not repaired properly.

We've also had in relation to the citations that were issued on the laterals, the broken laterals on the block --

We'll ask the Commissioner to comment on that.

We had a Water Department worker actually threatening people that they had to have it done in hours. 24 MR. McGOVERN: When there is a plan for them to go through that helps 116 Transportation & Public Utilities them out, they were told -- they weren't allowed --

The Commissioner has staff here and I'm going to ask the Commissioner to please have his staff communicate with you and get some of these issues resolved. He's got a lot of competent people here. And it's good that you've come down here today because you're obviously torqued up over this or you wouldn't be here because you're not talking about a rate increase.

Well, if we knew about the rate increase, we might have been here just for that.

Okay. We're going to make sure you have an opportunity to talk with the Commissioner's staff about the issues that are specific to your block. We'd like to get him back up to finish a couple of these items. But do you have any other information with regard to the proposed rate increase or any other 117 Transportation & Public Utilities details with regard to issues on your street? MR. McGOVERN: Other than to say I can't afford any more increases in any more bills right now.

We're a blue collar neighborhood, a lot of children on the block. We're hard-working families and we can't afford it.

I understand. Okay. Thank you for coming. Appreciate it. Commissioner?

Commissioner, I think you've been in this Council chamber for a lot of budget processes. One of the questions before you were Commissioner -- I didn't know you that well until just recently. And I think you've heard me discuss this issue that I discussed today. Why can't we get it right? Why can't we have a Water Department dig up the street and temporarily repair it properly? Because 118 Transportation & Public Utilities I call on municipal radio constantly, Water Department crew, plumber, streets department, whoever, but let's just talk about the Water Department. You've got your process. Your people dig up the street. At that point you lose control of the repair; am I right?

I think we backfill and then we refer the job to the streets department.

Do you know how long that could take? Months, months, months. And you talk about backfill. What burns me up about your people, here's backfill. I spent 30-plus years in a utility company, no cold patch in most cases. What they do, they dig up the street, they make the repair, they shovel back into that hole the material that they jackhammered out. They hit it with a couple compression devices or pneumatic tool and that's the repair. Sure, 80-degree summer day it works good. Three days later we get a thunderstorm, 119 Transportation & Public Utilities the vehicles deteriorate that temporary repair. And then you have a pothole -- it's not a pothole, a hole in the sheet that's inches deep. And I think it's a 6 crime. I think it's a crime when some poor blue collar person comes down at 8 o'clock, 11 o'clock at night after it's 9 rained hard for four hours and there's no 10 material left in the repair and they blow out a tire and bend a wheel, not enough to submit to your insurance company, you got to put on your credit card 3, 4 hundred dollars to get your vehicle fixed if you didn't damage the suspension of the vehicle. We that drive around in city cars, no big deal, put another tire on. But some poor person that has to pay for every repair to their vehicle, in my opinion it's something that's bothered me for a long time and I can't imagine that we don't get it right. For six months right out at Broad -- outside of City Hall here there's Water Department covering plates, a hydrant that was dug 120 Transportation & Public Utilities up. Commissioner Deputy, I had to communicate with you. If it weren't for you -- in our Center City, it was left -- it wasn't taken care of for weeks and weeks. I mean, it's so embarrassing to see that kind of a thing. It was a hydrant replacement or whatever. It had a metal covering plate left on it. A truck hit it, dislodged it, we had a hole in the street. Thank God somebody didn't get killed falling in it. So, Commissioner, I know you're a busy guy, Deputy Commissioner, but something's got to be done to give you control of repairing the excavations that you create. If you send a repair order to the streets department, it could take months. And if they're not, Commissioner -- and you're the operating deputy, right, Commissioner? If your people don't make a good temporary repair when they leave the site, that's not a good situation. And I can tell you if 121 Transportation & Public Utilities they're telling you that they're doing that, they're not. I think you get around the city as much as I do and when you see it, you should do something about it. MS. McCARTY: Debra McCarty, Deputy with Water. Councilman, a couple things you touched on. First of all, with the plumber's ditches, a lot of folks don't know that the plumbers are responsible for maintaining those ditches for 30 days and the entire permit process is supposed to trigger streets department to go back and repair it. And we have -- we are aware of them, we come upon them or folks such as yourself make us aware, we do contact the plumbers ourselves and get them to maintain that ditch for 30 days.

Commissioner, again, I don't mean to cut you off, but you got my hot button now. The whole process stinks. Why don't we come up with a program that makes the 122 Transportation & Public Utilities plumber responsible to repair the excavation to our specification? Thirty days? I mean, I come up some streets where six months the repair is done. The temporary repair sinks into the ground. It's like having a reverse speed bump in the community. In some communities, I guess they're pleased with that. But I think you need to address the issue to change the policy to do something that -- I have had my staff follow up on some of these plumber's ditches that the paperwork apparently fell between the cracks because the plumber's responsible to actually start the process. They have to send a card in or something to get the repair done. If the plumber forgets, what do we do, have a ditch that never gets repaired? MS. McCARTY: I might say we've recognized this and actually my predecessor has worked very hard and we are continuing to work with the streets department. And, in fact, we had a 123 Transportation & Public Utilities monthly meeting this morning where we're working on it and it's called ditch restoration. And we're working with the streets department to improve the process and the plumber's ditches is one of the things we're trying to improve upon. We're looking at having it so the plumbers don't have to come down to MSB to purchase the permits and tightening up on -- right now they can just get a general permit and then they're supposed to tell us the address. Well, when they can start to do it on-line, which is where we hope to go, that will stop and they'll be more accountable and it will be easier for streets department to track. This is -- I'm not trying to say it's not us, but it is a lot --

I think this is your strategy, the three of you, to get us off the rate increase. No. I'm just kidding. You totally distracted me now. I hear you. MS. McCARTY: It's an issue I 124 Transportation & Public Utilities think for all of us. We feel bad because it reflects poorly on the department. Most folks don't understand as you do that it's not the Water Department's responsibility --

When we come back in the spring -- in the fall, we are going to have a hearing about this whole issue of the coordination on utilities and the way we leave our streets. So you're going to hear more about this because you're going to be requested to come here when we have this hearing. MS. McCARTY: If I may add, you know, I know the streets department recognizes this issue too. And you might recall, the right-of-way ordinance is one of their major efforts to improve upon that, and that has begun.

It is a process that should be very easy to fix and make it run properly. And if it's about whose turf it is to fix the hole, whether the streets department or a 125 Transportation & Public Utilities contractor, I have enough confidence in the work that you do that I think if you were the responsible agency to repair the work that you do on the street, I think it would be done. Honestly, I believe that. I think you are a victim of a process. And I think that you guys can really figure out how to fix a hole that you create. If the money was in your budget to hire the subcontractor or to hire or have your own people, I don't know, but -- MS. McCARTY: In fact, we do some of the major main breaks or cave-ins. We have a contract that does the street restoration.

Thank you. I'll let Councilman Nutter as soon as he finishes up here -- he's checking on some information for us and we'll probably be finishing this thing up. Thanks, Deputy Commissioner, for that information because it really is a bad situation what's going on and it seems to be 126 Transportation & Public Utilities getting worse. Thank you, Councilman. I think the Hearing Examiner has his hand waving back there.

You really want to come back up to the table?

I have a comment.

Commissioner, thank you very much, Deputy Commissioner, and counsel. Mr. Davis, you've served the Commissioner very well. He has escaped by virtually answering none of the questions we asked. And you've done a tremendous job on behalf of the law department of the City of Philadelphia. Thank you so much. No. You've done a fine job. Commissioner, I appreciate all the information, and Deputy Commissioner as well. Thank you. Mr. Marcial. Let the record reflect this is one of the rare occurrences a witness has 127 Transportation & Public Utilities actually asked to come back to the table. Please identify yourself and proceed.

My name is Henri Marcial and I am the Hearing Examiner in the water rates case. I just wanted to comment that what went unanswered here today was the fact that this whole process is set by regulation, City regulation, and that regulation has been followed. And it was my job to direct the following of that regulation, and all the parties participated and were very amicable in that process. Generally speaking, once the Hearing Examiner's brought onto the matter, there's generally a six-month time line that needs to be followed in order to render a decision or in order so that the Commissioner can render a decision, and we've actually gone beyond that and tried to be as flexible as possible. With regard to the information provided here by the public today, 128 Transportation & Public Utilities including Mr. Haver's statements, there has been nothing that has not already been placed on the record in my memory or discussed amongst the parties and addressed. Although some of the parties have requested specific comments regarding specific items, if you'll note, one of my first statements in my decision is that this is an extremely voluminous record and thereby only the points that were significant to an immediate determination as to the rate were addressed unless otherwise stated by the participants in the proceeding. And I do understand there may be some questions regarding notice and the parties have discussed that amongst themselves. A recommendation on my part toward Council would be simply to allow them to use alternative forms of notice. The process tends to get bogged down with the formality of the regulation in and of itself and people are a little afraid for good reason to step outside of that 129 Transportation & Public Utilities without some encouragement. And I don't mean encouragement in a negative sense. I mean encouragement in a positive sense.

Councilman Rizzo.

One area, counselor, that you could probably elaborate for the record is you heard the Commissioner and his counsel discuss the process when it came to having enough time to appropriately advertise based on the dates that you came up with. Couldn't you have worked with them a little closer in establishing those dates when you were first brought aboard, couldn't you have established dates that would have given them enough time that they weren't up against it?

We established dates in two particular phases. We established the Phase dates. We had two scheduling conferences, first for Phase 1. On February 1, we had scheduling conference No. 2 for Phase 2. 130 Transportation & Public Utilities This was not a normal proceeding by any means due to the delay, approximately one-year delay in selecting a Hearing Examiner, selecting a Public Advocate, and moving the process along. So there were quite a few things here that technically did not proceed by the book. And we as the parties picked up with what we had and moved as best we could. With regard to allowing for notice, very fluid, and we were doing the best we could given the constraints to try and provide this in a six-month period of time. And we did discuss how much time could we float it out a little bit more. It was upon my request that a significant broadening of the publication was done, especially with regard to the Spanish language newspapers. It was upon my request that we had a hearing at the North Philadelphia neighborhood known as Norris Square or the Hunter School and that we have a translator available. I think everybody worked very well with 131 Transportation & Public Utilities regard to that and we were all quite flexible. However, there were not necessarily newspaper people and there were some difficulties in nailing down specifics for sites. And as was mentioned, even with the one site, the Hunter School actually has two addresses and the wrong address was printed. And we didn't catch that until the very end because the new school was built and the old school was the address listed, and they are approximately three blocks away from each other.

Well, I would hope -- I don't know the process, whether you'll do this again in the future, but I believe the consistency needs to be with the Water Department and the counsel to the Water Department to assure that appropriate notice. Basically, you're telling me that this one and we know that the examiner and the Public Advocate was delayed for many, many months because we asked this 132 Transportation & Public Utilities question months ago and we knew that there couldn't be a process -- and I believe even the president of City Council had some involvement in that process, but going forward I would appeal to the Water Department to step outside like you said of the norm to communicate more than the requirement and also to nail those dates down that does create a communication constraint.

And that's fine, but, again, in any future proceeding you're really going to have to see what kind of personalities line up at the table.

I think it's their job that whoever is the Hearing Examiner is basically asked to be cooperative and set these dates as early as possible in the process to give communication. Who knows? It may be you again but it may not be, but we have to rely I think on the Water Department to make sure who represents them has that on 133 Transportation & Public Utilities the agenda to get these dates established as early as possible. Thank you.

Thank you. I would also like to make one further recommendation. Community involvement basically revolves around community organizations and one of the failings here was the lack of community organizations to organize themselves. So I know there's an organizing department for the City and I would suggest that they be brought in for purposes such as this.

Okay. Thank you so much.

Thank you very much.

Thank you. Hope it was a good experience.

Seeing no 22 one else to testify, this hearing will be recessed to the call of the chair. Thank you. (Whereupon the hearing 134 Transportation & Public Utilities adjourned at 4:35 p.m.) - - - 135 CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence, and objections are contained fully and accurately in the stenographic notes taken by me upon the hearing of taken on July 14, 2005, and that this is a true and correct transcript of same. _____________________________ Kimberly A. Overwise Certified Realtime Reporter Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means unless under the direct control and/or supervision of the certifying reporter.)