The West Virginia Public Service Commission (PSC) has requested further financial documentation from Star City regarding its water and sewer utilities. This request occurs ahead of the PSC’s upcoming review of a joint petition submitted on August 26, 2023 by the Morgantown Utility Board (MUB) and Star City, which seeks to consolidate Star City’s utilities with MUB’s larger systems.
If the merger receives approval, MUB will fully acquire Star City’s water and sewer systems, including all associated tangible and fixed capital assets. In early October, PSC staff issued a memorandum stating that it does not support waiving historical accounting requirements for this case. The staff emphasized that a thorough evaluation of the application is impossible without the requested financial information.
The specific documentation sought by the PSC includes a comprehensive financial analysis justifying the merger, an accounting history of the franchises, licenses, and equipment involved, as well as any proposed allocations of book values for these assets.
Both MUB and Star City have contested this request. They argue that a financial analysis is unnecessary, asserting that the primary motivation behind the merger is to improve environmental conditions and operational efficiency, rather than financial gain. MUB has indicated that it does not require additional accounting history for the assets because this information is already available in Star City’s annual reports. Additionally, Star City has clarified that MUB will neither assume nor incur any debt related to the proposed merger.
Despite these objections, PSC staff remained firm in its stance. In a response issued on Monday, the staff reiterated that the requested information is not present in the annual reports submitted by either Star City or MUB and should not be difficult to compile. They specified, “At a minimum, the petitioners should be required to provide the proposed journal entries as required by the Commission’s Rules of Practice and Procedure (Rule 10.5).” The staff noted that MUB will be obligated to make adjusting journal entries upon acquiring Star City, and providing these entries will help the Commission maintain a clear record of how MUB intends to account for Star City’s assets.
Star City Mayor Sharon Doyle expressed the town’s commitment to collaborating with the PSC. “Star City will work with the Commission and provide any information that it may deem necessary to review and approve this merger. As it is in the best interests of Star City and the larger community, we anticipate ultimate approval by the PSC and we will continue to work to that end,” she stated.
MUB Communications Director Chris Dale indicated that all involved parties entered this process with the understanding that it might take up to six months to finalize. He reassured that the ongoing discussions are unlikely to extend this timeline. The acquisition has significant implications for the local community, as it aims to enhance the efficiency of water and sewer services while addressing environmental concerns.
As the PSC prepares for its review, the outcome of this request for additional financial reporting could significantly impact the future of water and sewer services in Star City and the surrounding areas.
