Emails from the state Public Service Commission show a legal staff member and other attorneys involved in West Virginia American Water's recent rate case questioned whether Commission Chairman Mike Albert should have been involved in the matter at all.
On Wednesday, the three-member Public Service Commission approved an $18.2 million annual revenue increase for American Water, the largest water utility in the state. That order will increase the average customer's monthly bill by $6.26 per month to $47.53 a month or $570 per year.
The final order in the case ended a complicated and highly-contested regulatory process, which included Albert and Mike Miller, a commission advisor, recusing themselves from one of the three cases that American Water had filed with the PSC in April of last year.
Albert had represented American Water for years as a utility attorney for the Charleston law firm Jackson Kelly, and had already recused himself from an ongoing investigation into the company. Miller had worked for the company for 35 years as a vice president, treasurer and director of rates before moving to the PSC.
Both state officials removed themselves from American Water's depreciation case in October, when a 1998 settlement that Albert had drafted for the company was submitted as evidence by the state's Consumer Advocate Division. That document showed that American Water had not followed the terms of the PSC order from that year, though no current company employee could answer why.
Meanwhile, Albert and Miller continued to be involved in the two accompanying cases, in which American Water requested more than $32 million in additional revenue for water and sewer operations - the largest request of its kind in the commission's history.
It is unclear what ethics rules apply for the PSC, a quasi-judicial body that regulates public and private utilities in West Virginia, but the state's Code of Judicial Conduct and Code of Conduct for Administrative Law Judges state that officials should "avoid impropriety and the appearance of impropriety."
According to the emails obtained through a freedom of information request, attorney Tony Sade, who was representing the PSC's staff at the time, questioned whether Albert's removal from a third of American Water's pending cases sufficiently separated him from his previous work for the company
"Guess it's time to add my [staff's] $0.02," Sade wrote, in an Oct. 22 email sent to numerous lawyers and staff members involved in the case. "I think the comments from the other parties start to highlight what I think is the overarching issue - whether the Chairman's recusal goes far enough."
Sade, who has since joined the Consumer Advocate Division as an attorney, goes on to point out that all three cases - water, sewer and depreciation - had already been consolidated by the commission in an order filed on May 27, 2015. Depreciation rates for utility companies feed into customer rates.
"Given the possibility that the depreciation case will bleed into the other cases, how can the Chairman effectively insulate himself from the possibility of exposure to testimony on depreciation, or depreciation related matters that implicate or have an effect on rate issues," Sade asked.
The documents obtained from the PSC showed no indication that Albert or Miller discussed their recusals via email, and Susan Small, the PSC's director of communications, did not respond to a request for comment on the matter prior to the publication of this story.
Albert did address his recusal and his continued involvement in the water and sewer rates, however, during the evidentiary hearing that started on Oct. 27.
In opening the hearing, Albert said he wouldn't take part in the deliberations over the depreciation case and would leave those issues up to commissioners Brooks McCabe and Kara Cunningham Williams - both of whom have less experience than Albert in utility regulation.
He went on to explain that depreciation issues were likely to arise during testimony about the water and sewer rate requests, but that it likely wouldn't require him to leave the hearing.
"I don't intend to jump up and leave the room every time somebody mumbles depreciation. I will assure you that I am not going to participate in determination of depreciation in this case," Albert said. "I caution the parties, however, to avoid issues in the rate case that relate to the depreciation case, if you can do so."
"We're just going to have to find our way through this," he said. "I feel like I have a statutory obligation to try this rate case. I will do so within the bounds of propriety and the canons. And I don't believe I'm precluded from the rate case."
According to the emails, Sade was not the only one to question Albert's decision not to remove himself from the water and sewer rates too.
Lawyers representing the state's residential customers and large businesses stated concerns over Albert's partial recusal and questioned the effect it would have on evidence and the examination of witnesses during the hearings.
In emails, Lee Feinberg, a Spilman Thomas & Battle attorney representing the West Virginia Energy User's Group, explained he didn't want the setup to deprive his clients of their rights in the case.
"From a practicality standpoint, what if there are questions to be asked of a witness in the rate case that are implicated by [American Water's] depreciation decisions over the past 17 years," Feinberg asked in an email sent to Sade and Tom White, an attorney for the Consumer Advocate. "Are we supposed to reveal them now so that witness can be set aside for those questions?"
"That's exactly right!" White replied. "Everything we ask a base rate witness can do that."
"Albert's decision makes this very unworkable. He really should have just recused himself from the whole case."
Reach Andrew Brown at andrew.brown@wvgazettemail.com, 304-348-4814 or follow @Andy_Ed_Brown on Twitter.