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Public Service Commission approves transfer of Allegany County'served system to Maryland American Water; commissioners consider reconsideration and eminent'dom
Summary
The Maryland Public Service Commission issued a March 6 letter order approving the transfer of Maryland Water Company assets serving Allegany County to Maryland American Water with a recorded net book acquisition cost of $20,623,978 and restrictions preventing recovery of transaction-related costs. County staff recommended seeking reconsideration within 30 days and exploring eminent domain as a long'term remedy.
County legal staff told commissioners that the Maryland Public Service Commission (PSC) issued a letter order on March 6 approving the transfer and merger of Maryland Water Company assets serving Allegany County to Maryland American Water.
"The short of it is they blessed the transfer from Maryland Water Company to Maryland American Water Company," Lee said, summarizing the order and noting the PSC recorded the net book acquisition cost at $20,623,978 and prohibited Maryland American Water from recovering goodwill, transaction costs or other acquisition'related intangibles through customer rates.
Lee said the PSC declined the county'requested hearing and found the administrative record plus conditional language proposed by the parties "sufficiently addresses the principal issues." He recommended staff file a petition for reconsideration during the 30'day window, while acknowledging such rehearings are rarely granted.
Commissioners discussed additional remedies. One commissioner suggested exploring eminent domain to acquire the system for public ownership if residents face unaffordable rates; Lee said preliminary research indicates there is authority to condemn where rates are unreasonable but such proceedings would require substantial effort, outside counsel, and potentially independent court valuations.
Commissioner questions highlighted valuation differences: county staff said Maryland American Water recorded a net book value of about $20.6 million, while American Water'related filings previously mentioned goodwill adjustments that could produce different figures. Jeff asked whether the commissioners could instead sue the PSC over denial of a hearing and valuation; staff said litigation against the PSC would be difficult and success would require showing the commission acted arbitrarily or abused its discretion.
Lee noted some neighboring jurisdictions supported the application, citing Harford County'type comments in the PSC record endorsing the merger on grounds of operational efficiency and infrastructure investment. Lee also said the Office of People'Counsel (OPC) negotiated conditional restrictions that prohibit post'transaction rate increases tied to acquisition goodwill and transaction costs, a concession the county welcomed.
Staff committed to return in two weeks with further detail on costs, timelines and outside counsel options for a potential eminent domain path and said they would file for reconsideration if commissioners agreed that was an appropriate immediate step.
No formal county action on reconsideration or eminent domain was recorded in the work session; staff sought direction to research options and report back.
