Opinion
No. 2568 C.D. 2010
12-29-2011
Midland Heights Homes, Inc., Appellant v. Municipal Authority of the Borough of Midland
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE JAMES R. KELLEY, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COHN JUBELIRER
Midland Heights Homes, Inc. (Midland) appeals from the Order of the Court of Common Pleas of Beaver County (trial court), which held that the single-uniform rate system established by the Municipal Authority of the Borough of Midland (Authority) for water and sewage services was reasonable and uniform.
Midland argues that the trial court erred in so holding because: (1) the Authority improperly reclassified Midland as a commercial user when it should be considered a bulk user; (2) the rate study on which the Authority based its change from a declining block rate system to a single-uniform rate system was not performed in accordance with industry standards; and (3) the single-uniform rate is neither reasonable nor uniform under the terms of the Section 5607(d)(9) of the Pennsylvania Municipal Authorities Act (Act), 53 Pa. C.S. § 5607(d)(9) (granting a municipal authority the exclusive authority to, inter alia, set rates and charges for services that are reasonable and uniform), because it bears a disproportionate relationship to the service the Authority provides to Midland. For the following reasons, we affirm.
The Authority provides both water and sewage services. The Authority's "water intake system was constructed in 1953 and is owned by" the Allegheny Ludlum Company (Allegheny), the successor of the Crucible Steel Mill. (Trial Court Op. Findings of Fact (FOF) ¶ 1.) The Authority "purchases its raw water from [Allegheny] on a cost-plus[-]overhead plus 5% 'cost basis' that is accounted for on a yearly basis." (FOF ¶ 2.) Midland "is a qualified low-income development" with 263 units that "receives no government subsidies" and is incorporated as an "S" corporation. (FOF ¶¶ 8-9.) Midland has one master water meter provided by the Authority through which Midland purchases all of the water for its units and then resells the water to the individual units by including the water costs in the unit's monthly rent. (FOF ¶¶ 10-11.) None of the individual units have an individual water meter. (FOF ¶ 12.)
Based on 1996 and 2004 rate studies, the Authority has long term contracts with certain customers to provide water under a declining block system, which reduces the cost of the water to the customer as the customer's water consumption increases. (FOF ¶ 3.) The Authority conducted a rate study on August 9, 2004, "to generate sufficient income to cover expenses," but that study was not adopted. (FOF ¶ 4.) Nevertheless, rates increased for Authority customers under the 1996 declining block system. (FOF ¶ 4.) The Authority requested a rate study in December 2005 (2005 Study), which was performed by Daniel Sell, P.E., and a single-uniform rate structure was adopted that applied a uniform rate per CCF. (FOF ¶¶ 5, 15.) The 2005 Study was implemented for water and sewage usage and placed "users in five categories: Residential; Commercial; Public; Industrial; and Bulk users." (FOF ¶ 6.) The 2005 Study did not use a cost of service analysis, which calculates the actual cost of service in each classification, in arriving at the single-uniform rate system. (FOF ¶ 17.) Under the 2005 Study, Midland went from a bulk user customer, which it had been in the 1996 Study, to a commercial customer. (FOF ¶¶ 7, 16.) From 2004 to 2008, the Authority's Water and Sewer Funds suffered losses ranging between $4,407 to $180,000 for the Sewer Fund and $9,394 to $297,789 for the Water Fund. (FOF ¶ 13.) As a result of these losses, the Authority changed its rate structure "from the declining block rate to the single-uniform rate system in order to raise the" revenue necessary to cover its costs. (FOF ¶ 14.) Thereafter, Midland initiated the present action challenging the Authority's rate increases, the elimination of the declining block rate, and the reclassification of Midland as a commercial user as violating Section 5607(d)(9) of the Act.
One CCF is the equivalent to 100 cubic feet of water.
In addition to the single-uniform rate, Midland and other customers that are located in the "high service district," i.e., those customers who are located at the top of large hills, are required to pay a surcharge of .344 cents per CCF to account for the additional costs associated with pumping water up the hill and into a water tower. (2005 Study at 1, R.R. at 593a.)
Midland hired James M. Mussman, P.E., to evaluate the 2005 Study, as well as the rate increase of March 1, 2006, using a cost of service analysis, and offered his testimony at the hearing before the trial court. (FOF ¶ 18.) He testified that the Authority had used the cost of service analysis for its prior studies, but that it did not use one for the 2005 Study. (Hr'g Tr. at 94-95, 98-99, R.R. at 120a-21a, 124a-25a.) Mr. Mussman stated that a cost of service or cost allocation analysis should be performed every time an authority wants to adjust rates, regardless of the type of rate. (Hr'g Tr. at 84-85, R.R. at 110a-11a.) He further testified that, under a cost of service analysis, Midland would only be required to pay for the true costs associated with directly providing it with its water, i.e., the backbone services, and that using the declining block rate satisfies this requirement. (Hr'g Tr. at 86-87, 106, 113-14, R.R. at 112a-13a, 132a, 139a-40a.) According to Mr. Mussman, Midland was being significantly overcharged for the benefits it received from the Authority. (Hr'g Tr. at 105-06, 145, 150-53, 169-70, R.R. at 131a-32a, 171a, 176a-79a, 195a-96a.) However, Mr. Mussman agreed that: the American Water Works Association (AWWA) manual, on which he relied in rendering his opinions, was not a legal standard for establishing water rates, but only a guide and recommendation; the Authority's rate increase was necessary; and there is nothing inherently wrong with a uniform rate. (FOF ¶ 19; Hr'g Tr. at 91, 99, R.R. at 117a, 125a.) Additionally, he acknowledged that: only 25% - 30% of municipalities use a declining block rate; he did not review the costs or expense of operating the entire Authority system; if a large customer, such as Allegheny, did not use as much water, other Authority users would have to pay more to cover the Authority's costs; and it is a matter of utility policy which rate the utility uses. (Hr'g Tr. at 78, 99, 177, 202, R.R. at 104a, 125a, 203a, 228a.)
The Authority presented the testimony of Mr. Sell, who completed the 2004 and 2005 Studies. Mr. Sell testified that the 2005 Study, and change in rate plans, was necessary because the revenue being recovered under the 2004 rate structure was not covering the Authority's costs. (Hr'g Tr. at 330-31, R.R. at 356a-57a.) According to Mr. Sell, there was concern that the Allegheny-owned mill was not doing well and that its water usage would decrease, resulting in less revenue to the Authority. (Hr'g Tr. at 330, R.R. at 356a.) Mr. Sell testified that, in addition to the costs of maintaining an aging system, the Authority was attempting to collect enough revenue to finance a new water intake system independent of Allegheny's system, which first appeared in the 2004 Study and continued to be a priority. (Hr'g Tr. at 14, 341, R.R. at 40a, 367a.) Mr. Sell stated that the benefit of the single-uniform rate system was that it was simple, would raise more revenue, and that when designing a single-rate structure, it was not necessary to conduct a cost of service study because such studies only are necessary when using a declining block rate system. (Hr'g Tr. at 47, 333-35, R.R. at 73a, 359a-61a.) He further noted that the Authority had been unable to fund capital projects as anticipated because of the lack of revenue. (Hr'g Tr. at 344, R.R. at 370a.) Mr. Sell indicated that, unlike Mr. Mussman who only looked at the costs to one of the Authority's customers, he had to consider the entire Authority and its revenue requirements. (Hr'g Tr. at 347-48, R.R. at 373a-74a.) With regard to reclassifying Midland as a commercial user, Mr. Sell stated that the existing bulk users were out of the Authority's service area or had existing service contracts with the Authority. (Hr'g Tr. at 349, R.R. at 375a.) Finally, Mr. Sell explained that "a water system . . . is an interconnected web of pipes, a network, a gridiron. A water main break in one part of town, be it a backbone line or a small diameter main, impacts the entire system," that whole system must be there in order to provide Midland with water, and the entire system had to be maintained. (Hr'g Tr. at 351-52, R.R. at 377a-78a.)
Andrew J. Kicinski, the Professional Engineer who performed the Authority's 1996 Study, also testified on the Authority's behalf. Mr. Kicinski stated that Mr. Mussman's study was different from any study he previously had seen because it focused on one customer and did not consider what revenue was required to pay a utility's bills and remain solvent. (Hr'g Tr. at 373, R.R. at 399a.) He disagreed with Mr. Mussman's approach of backing out the costs of all of the non-backbone lines to benefit one customer as being inappropriate, and that one portion of a water or sewage network cannot function without other portions of the network. (Hr'g Tr. at 373-78, R.R. at 399a-404a.) Mr. Kicinski indicated that Midland's overcharge could not be calculated without looking at the actual revenues and expenses, and that Mr. Mussman did not analyze any actual numbers beyond 2005. (Hr'g Tr. at 379-80, 390, R.R. at 405a-06a, 416a.) In addition to the testimony of Mr. Sell and Mr. Kicinski, the Authority presented documentary evidence that showed, notwithstanding its rate increases, that the Authority experienced a net operating loss of $266,283 in 2004, and continued to experience operating losses in 2005, 2006, 2007, and 2008. (Combined Statements of Revenues, Expenses & Changes in Net Assets, 2004-2008, R.R. at 695a, 721a, 753a, 781a, 809a.)
The trial court concluded that, although it may have had a different opinion regarding the basis for the Authority's actions, such difference of opinion is insufficient to allow the court to substitute its discretion for the Authority's determinations. Patton-Ferguson Joint Authority v. Hawbaker, 322 A.2d 783, 785-86 (Pa. Cmwlth. 1974). The trial court further noted that the testimony presented established that the classes created by the 2005 Study were treated alike, except for those entities with which the Authority had contracts, which did not include Midland. (Trial Court Op. at 4.) The trial court further pointed out that the Borough of Midland's water and sewage system was previously subsidized by the large volumes of water used by Crucible Steel to manufacture stainless steel, the manufacture of which Allegheny has curtailed severely. (Trial Court Op. at 4.) This curtailment has resulted in financial consequences to the Authority's operation. The trial court held that a municipal authority has the right to reclassify its customers in order to set reasonable rates, Latrobe Municipal Authority v. Youngstown Municipal Authority, 456 A.2d 234, 237 (Pa. Cmwlth. 1983), and that a uniform rate may be reasonable even if an alternative method may advantage or disadvantage a particular user, Turley v. North Huntingdon Municipal Authority, 289 A.2d 509, 512-13 (Pa. Cmwlth. 1972). The trial court noted that a net-rate increase of $5.50 per month per unit is magnified by the fact that Midland has only one meter and by Midland's refusal to assess its tenants the net-rate increase of $5.50 per month per unit, which resulted in Midland experiencing a voluntary loss of income. Accordingly, the trial court entered a verdict in the Authority's favor. Midland now appeals to this Court.
In reviewing a trial court's decision on whether a municipal authority's utility rate is reasonable under the Act, our review is "limited to determining whether factual findings are supported by substantial evidence and whether the law was properly applied to the facts." Western Clinton County Municipal Authority v. Rosamilia, 826 A.2d 52, 55 n.3 (Pa. Cmwlth. 2003).
Section 5607(d)(9) of the Act provides:
(d) Powers. - Every authority may exercise all powers necessary or convenient for the carrying out of the purposes set forth in this section, including, but without limiting the generality of the foregoing, the following rights and powers:
. . . .
(9) To fix, alter, charge and collect rates and other charges in the area served by its facilities at reasonable and uniform rates to be
determined exclusively by it for the purpose of providing for the payment of the expenses of the authority, the construction, improvement, repair, maintenance and operation of its facilities and properties. . . .53 Pa. C.S. § 5607(d)(9). A municipal authority's utility rates must be "reasonably proportional to the value of the service rendered." Western Clinton County Municipal Authority v. Rosamilia, 826 A.2d 52, 57 (Pa. Cmwlth. 2003). In Allegheny Ludlum Corporation v. Municipal Authority of Westmoreland County, 659 A.2d 20 (Pa. Cmwlth. 2005), this Court held that:
[i]n deciding whether a rate is reasonable, the trial court's scope of review is limited to determining whether there has been a manifest and flagrant abuse of discretion or an arbitrary establishment of the rate system. . . . The party challenging the validity of the rate has the burden of proving that it is unreasonable. . . . Whether a rate is reasonable is dependent upon whether it is reasonably proportional to the value of the service rendered . . . . Judicial discretion may not be substituted for administrative discretion.Id. at 26 (citations omitted). Moreover, in considering whether a user has satisfied its burden of proving that a rate system is unreasonable, the "court is bound to look not only to the use of the challenged service, but also to its value." Scott Township Sewer and Water Authority v. Ease Simulation, Inc., 2 A.3d 1288, 1290 (Pa. Cmwlth. 2010). "[R]ates need not be proportioned with exactness to the use made or the cost to the individual customer, so long as it is reasonably related to the cost of maintaining the service for all the customers, and the customers challenging the rates receive 'some' benefit from the system." Ack v. Carrol Township Authority, 661 A.2d 514, 518 (Pa. Cmwlth. 1995). In determining whether a rate is reasonable and uniform, the trial court, not the appellate court, is the fact finder and has the authority to weigh conflicting testimony, determine credibility, and resolve conflicts in the evidence. Scott Township, 2 A.3d at 1291.
Midland asserts that the single-uniform rate system implemented by the Authority in 2006, imposing a single rate on all non-contract users regardless of the Authority's actual cost of providing service to a particular user, is neither reasonable nor uniform under the terms of the Act and bears a disproportionate relationship to the service the Authority provides to Midland. Relying on Apartment Association of Metropolitan Pittsburgh v. Municipal Authority of the Borough of West View, Water Department, 27 Pa. D & C.3d 202 (1983), Midland further argues that charging all of its non-contract customers the same rate, regardless of the type of entity and usage of that customer, also renders the Authority's single-uniform rate system unreasonable and non-uniform. Midland's argument is three-fold: (1) its reclassification from a bulk user customer to commercial customer was improper given its usage characteristics; (2) the 2005 Study was not proper because there was no cost of service analysis performed; and (3) the use of the single-uniform rate system results in Midland bearing a disproportionate amount of costs in relation to the service actually provided to Midland and, therefore, is not reasonable and uniform.
First, Midland asserts that it should be reinstated as a bulk use customer and receive the benefit of the declining block rate because it is like the Authority's other bulk use customers. According to Midland, it, like the Authority's other bulk users, has only one water meter, maintains its own set of water and sewer lines, and resells the water to its tenants. Thus, pursuant to Apartment Association, Midland argues that it must be treated the same as those entities with which it has similar characteristics. The Authority responds that Midland has no legal entitlement to a particular classification, including the bulk user classification, because municipal authorities have the right to classify and reclassify its customers. Latrobe Municipal Authority, 456 A.2d at 237; Patton-Ferguson, 322 A.2d at 785. We agree with the Authority that Midland did not have an entitlement to a particular classification.
Section 5607(d)(9) grants the Authority with the exclusive authority to, inter alia, "fix, alter, charge and collect rates" so that the Authority can pay its expenses, and construct, operate, improve, and maintain its facilities and properties. 53 Pa. C.S. § 5607(d)(9). There is nothing in the Act that requires or suggests that a municipal authority must classify its customers into different classifications based on volume of usage. The ability to reasonably classify and reclassify its customers is a matter left to the municipal authority's discretion. Latrobe Municipal Authority, 456 A.2d at 237. In Township of Hopewell v. Municipal Water Authority of the Borough of Aliquippa, 475 A.2d 878 (Pa. Cmwlth. 1984), we stated that a "municipal authority may create classifications so long as the charge is uniform," and the authority "may set different rates for the same type of user within each class." Id. at 882 n.5 (emphasis added). Such language is not mandatory and does not require, as Midland asserts, that the Authority must revert to its prior classification to comply with the Act. As noted above, in reviewing these matters, we must determine whether Midland established that its reclassification was the result of a manifest or flagrant abuse of discretion. Allegheny Ludlum Corporation, 659 A.2d at 26. We conclude that it was not. Mr. Sell explained why he reclassified Midland as a commercial customer, and we conclude that his explanation for the reclassification was reasonable. Additionally, the losses sustained by the Authority could not be continued and, therefore, it was necessary for the Authority to change its existing rate structure. Even Mr. Mussman's testimony, that only 25% - 30% of municipal entities use a declining block rate, supports the conclusion that no particular entity is entitled to that rate. Moreover, we agree with the Authority that its other bulk user customers are municipalities outside the Borough, having contracts with the Authority for water and sewage services and, therefore, are unlike Midland. The commercial category, as defined by the 2004 and 2005 Studies, includes apartment buildings with a one inch or larger meter, churches, and all businesses not included in the industrial category. Midland is a business that is not included in the industrial category and, therefore, its placement in the commercial category was not a manifest or flagrant abuse of discretion.
Next, Midland contends that the switch from the declining block rate system to the single-uniform rate system is improper because the 2005 Study: did not use the AWWA guidelines, which previously were used in the Authority's 1996 and 2004 Studies; and was not based on a cost of service analysis, which Mr. Mussman testified and the Court of Common Pleas of Allegheny County in Apartment Association concluded was absolutely necessary. The Authority argues that there is no legal requirement, and Midland does not cite to any mandate, that requires it to perform a cost of service analysis in setting a single-uniform rate, and that uniform rates have been widely accepted. Again, the Authority is correct.
First, our review of the Act reveals that there is no mandate requiring the Authority to perform any particular study, and the AWWA manual, which Midland and Mr. Mussman assert require such studies, is a guidance document. Second, this matter is distinguishable from Apartment Association that Midland asserts is analogous to this matter. We note, initially, that this Court is not bound by a trial court decision. Crum v. Burd, 571 A.2d 1, 3 (Pa. Cmwlth. 1990). Moreover, Apartment Association involved a declining block rate system, not a single-uniform rate system. As Mr. Spell and Mr. Kicinski testified, a cost of service analysis would be necessary to implement a declining block rate system, but is not necessary where an authority is seeking to adopt a single-uniform rate system, as the Authority did here. (Hr'g Tr. at 47, 333-35, R.R. at 73a, 359a-61a.) Accordingly, we conclude that the Authority did not commit a manifest or flagrant abuse of discretion by not performing a cost of service analysis for its single-uniform rate system.
Finally, Midland argues that the imposition of the single-uniform rate system is not reasonable and uniform because Midland is bearing the costs for parts of the Authority's infrastructure from which it receives no personal benefit. Midland asserts that it should not have to bear any costs that are not directly related to the service it receives. Citing contracts with other bulk users or industrial customers, which did not require those users to pay for the portions of the Authority's infrastructure not directly associated with providing those entities with service, Midland maintains that it should be entitled to the same treatment. According to Midland, single-uniform rate systems are not appropriate where usage characteristics differ, the Authority has a duty to set classifications for different usage characteristics under Apartment Association, and the only delineation between customers under the Authority's system is whether there was a contract in place at the time it implemented the single-uniform rate system in 2006. Midland argues that it should not have to subsidize other parts of the Authority's system and that, in establishing the single-uniform rate system, the Authority is requiring it to do so in violation of Section 5607(d)(9) of the Act and Apartment Association.
Midland also asserts that the fact that it can pass the costs onto its tenants is irrelevant to the question of whether the single-uniform rate system adopted by the Authority is reasonable and uniform and, therefore, the trial court erred in relying on that fact. According to Midland, the Act does not require it to mitigate its damages. The Authority maintains that the cited commentary was not necessary to the trial court's holding, which was based on the trial court's acknowledgment that it could not substitute its discretion for the Authority's determinations and, accordingly, constituted dicta. Our reading of the trial court's opinion confirms that this statement was dicta and is not a basis for reversing the trial court's Order.
In response, the Authority argues that its single-uniform rate system is reasonable and uniform under Section 5607(d)(9), that the Act requires that the rate be reasonably related to the cost of maintaining service for all customers, and that the challenging ratepayer must receive only some benefit from the service, Scott Township, 2 A.3d at 1291, which is the case here. The Authority contends that its actions in setting a single-uniform rate system to address its ongoing budgetary needs did not constitute a manifest and flagrant abuse of discretion and, therefore, the trial court did not err in denying Midland's challenge. According to the Authority, although sewage and water rates must have a reasonable relation to the service actually rendered or as readily available for use, Patton-Ferguson, 322 A.2d at 786, those costs do not need to be apportioned with exact precision based on the cost of service to a particular customer. Scott Township, 2 A.3d at 1291; Kennedy Township v. Ohio Valley General Hospital, 566 A.2d 348, 352 (Pa. Cmwlth. 1990); Twining Services Corporation v. Northhampton, Bucks County Municipal Authority, 533 A.2d 202 (Pa. Cmwlth. 1986) (affirming on the basis of the trial court's opinion at 44 D. & C.3d 89, 95 (1986)); Turley, 289 A.2d at 512. The Authority points out that Midland benefits from the Authority's entire system; if the Authority's system did not exist, fell into disrepair, or the Authority was unable to continue as a going concern, Midland would be forced to construct its own water and sewer system, likely at a more significant cost than the increases Midland pays to the Authority. The Authority acknowledges that the declining block rate was more favorable for Midland than the single-uniform rate system; however, there is no requirement that the Authority maintain the same structure, particularly where, as here, the Authority was facing, inter alia, operating losses and maintenance issues in its systems.
The Authority also acknowledges that the percentage of the rate increase was high, but notes that this was because the prior rates were very low and that its rates are lower than those in the communities surrounding the Borough. (Municipal Water Rate Comparison Chart 2006-2009, R.R. at 1073a.)
After reviewing the parties' arguments and the relevant law, we conclude that the Authority's establishment of the single-uniform rate system did not violate the Act as an unreasonable and non-uniform rate. Midland's argument is based on a belief that it is not required to pay for any part of the Authority's system not directly related to providing Midland with water and sewage services, and that anything other than a declining block rate is not proportionate to the services it receives and, therefore, violates the Act. However, the Authority is correct that this Court has rejected the position that rates must be directly or exactly proportionate to the cost of a particular customer's use. Ack, 661 A.2d at 518. Rather, the rates must be "reasonably related to the cost of maintaining the service for all the customers, and the customers challenging the rates receive 'some' benefit from the system." Id. (emphasis added). Thus, in Scott Township, we held that, although the customer was paying between 400% and 800% more for its utility services than its neighbors, the rate was not unreasonable because the authority in that case was providing the customer with sufficient water, sewage, and fire protection to meet both its present and future needs. Scott Township, 2 A.3d at 1291. In Kennedy Township, a hospital that had constructed a sewage line that flowed through and emptied into a municipal authority's system objected to being assessed for additions made to the authority's system that were not directly connected to the hospital's line. In reversing the trial court's determination in the hospital's favor, we held that the authority's system was comprehensive and that although "it may be true that the [h]ospital received no direct benefit from the . . . additions to the system, it is benefitted by the system generally and, thus . . . is subject to reasonable rates." Kennedy Township, 566 A.2d at 352 (emphasis added). In Twining Services, the trial court held in its opinion, the basis on which this Court affirmed, that "it is not an abuse of discretion to charge flat rates as opposed to rates for particularized and specific use of its facilities. See Caudriet v. Township of Benzinger, . . . 411 A.2d 846 ([Pa. Cmwlth.] 1980)." Twining Services, 44 D. & C.3d at 91, aff'd, 533 A.2d 202 (Pa. Cmwlth. 1986). In Turley, a municipal authority built a new sewage system that was financed, in part, by a uniform rate paid by its old customers, who objected because they were paying for a sewage system that they could not use. This Court affirmed the trial court's decision in favor of the authority stating that, although the authority may have been able to use an alternative way to finance the construction of the new system, "which would have been more favorable from [the old customers'] point of view, we [could not] find that it committed a manifest abuse of discretion in not doing so." Turley, 289 A.2d at 512-13.
Here, the Authority charges all non-contract customers the same rate and, as we stated in Patton-Ferguson, "since all [customers] pay the same rate, it is obviously uniform." Patton-Ferguson, 322 A.2d at 786 (citation omitted). Additionally, the cost that Midland's rates must be reasonably related to is the cost of maintaining the Authority's system for all of the customers and Midland need only receive some benefit from that system on its own behalf. Ack, 661 A.2d at 518. Because the Authority enacted the single-uniform rate system that is directly based on the Authority's expenses and upcoming projects, including an attempt to purchase its own intake system, the rates are reasonably related to the cost of maintaining that system. Midland is receiving the benefit of obtaining water and sewer service from the Authority, which it pays based on Midland's actual usage, and being connected to the Authority's systems in general. Moreover, as the Authority points out, if it is unable to continue as a going concern, Midland would be forced to seek other sources for its water and sewage needs that could be significantly more expensive, particularly if it has to construct its own systems. As we stated in Turley, the Authority could have chosen an alternative method in meeting its financial needs that "would have been more favorable to [Midland's] point of view, [but] we cannot find that it committed a manifest abuse of discretion in not doing so." Turley, 289 A.2d at 512-13. Finally, Apartment Association is distinguishable from this matter because that case involved the use of rates for water consumers of the same class that were not the rates set forth in the authority's rate schedule and not based on the size of the water meter, as were the other class members' rates. Neither issue is present here. Thus, we conclude that the Authority did not commit a manifest abuse of discretion in establishing the single-uniform rate system and, therefore, did not violate Section 5607(d)(9) of the Act.
The contract customers appear primarily to be other municipal entities and industrial customers that are located outside the Authority's service area. The 2005 Study indicated that the Authority could not change the rate structure of those with existing contracts without breaching the contract, but that the Authority intended to impose the new, single-uniform rate system as the contracts came up for renegotiation. (2005 Study at 2, R.R. at 594a.)
In Apartment Association, the customers were not classified based on use, i.e., residential or non-residential, but on whether there were more than one premises served by a single water meter. For all those premises that were served by individual meters, their rates were determined based on the size of the meter and the applicable rate schedule. Id. at 213-14. If more than one premises, i.e. a multi-unit building, whether categorized as residential, commercial or industrial, were served by a single meter the rate was calculated as if it were a 5/8ths inch meter, regardless of the meter's size. Id. at 214. The Court of Common Pleas of Allegheny County (CCP) held that this was not a uniform charge for the class of customers because it allowed the authority to unilaterally change the formula by which the rate was calculated because the authority could increase the size of a water meter without input from the customer. Id. at 217. The CCP then concluded that the rates were not reasonable because they were not reasonably proportional to the service rendered. Id. at 221. The CCP stated that the rates charged to a class of customers should generate revenues that are roughly proportional to the costs of serving those customers and that the authority did not perform any studies to determine those costs. Id. Additionally, the CCP believed that the authority's billing method did not take into account the differences among residential, commercial, and industrial users and that, in failing to do so, resulted in the rates charged to the multi-premises, single-meter customers unreasonably disproportionate to the service rendered. Id. at 220-21. However, unlike the categories in Apartment Association, which resulted in different rates for the different categories, the categories here, although established, do not change the rate the Authority's customers' pay. With the exception of those entities that had existing contracts with the Authority when it changed from the declining block rate to the single-uniform rate, all of the Authority's customers pay that same rate regardless of whether they are categorized as residential, commercial, or otherwise. --------
Accordingly, the trial court's Order is affirmed.
/s/ _________
RENÉE COHN JUBELIRER, Judge ORDER
NOW, December 29, 2011, the Order of the Court of Common Pleas of Beaver County in the above-captioned matter is hereby AFFIRMED.
/s/ _________
RENÉE COHN JUBELIRER, Judge