Consultants outline capacity‑improvement fees, PSC requirements at Charles Town workshop

Mahila Cooper Smith, a manager with consulting firm Raftelis, told the Charles Town Board of Directors on Monday that capacity improvement fees — also referred to as capacity fees, system development charges or connection fees — are intended to make new development pay a proportional share of growth‑related capital costs. "Basically, if you've heard the phrase 'growth pays for growth,' that's what the capacity improvement fees are for," she said.

Smith outlined three standard ways utilities calculate those fees: a buy‑in (based on existing system value), an incremental or marginal approach (based on future growth capital) and a combined method (which uses elements of both). She described how Raftelis calculates a "replacement cost new less depreciation" value for eligible assets, excludes grant‑funded or donated items and subtracts debt principal to avoid charging new customers twice for debt service.

The consultant said the dollar‑per‑gallon‑per‑day cost is converted into an equivalent residential unit (ERU) using a level‑of‑service standard (for example, planning guidance from the Department of Health and Human Resources) or the utility's existing usage data. Smith said Raftelis will model fees under all three methodologies and recommend the approach that best fits the city's data and circumstances.

On legal requirements, Smith said West Virginia has no single statute for city CIFs but that the Public Service Commission and case law set four criteria the city must satisfy to impose such fees: evidence of historical customer growth; a projected future growth rate (generally at least 2% annually or 20% over 10 years); a showing that existing capacity will be exhausted within roughly five to seven years; and, if fees rely on future capacity, that the calculation use gross related capacity. "We'll work with your legal staff to make sure that however we calculate these, they're fully satisfied that we meet all of the requirements for the PSC," she said.

During questions, Raftelis estimated it would take about "2 to 3 months, assuming we get all the data," to complete the city's study and compute CIFs. Board member John Maxey said the city's strategic plan, published last year, projects a roughly $25,000,000 plant upgrade within the next five years — a projection he said would support the case for CIFs. A committee member noted that a Berkeley County case led to contested CIFs there and that some fees were rescinded and refunded after appeals at the PSC.

Council members asked practical questions about how Raftelis will treat inflation, how the city should update its equivalent dwelling unit (EDU) chart for newer uses such as breweries, and whether distribution or transmission projects that do not add treatment capacity would be included. Smith said Raftelis typically uses current dollars for CIP and will discuss inflation adjustments with staff; she confirmed transmission or distribution projects that are growth‑related can be included but that treatment (design) capacity will be the limiting factor for fee calculations.

Next steps: Raftelis will issue a data request for fixed assets, CIP items and plant capacities, review results with staff, present recommended fees to the utility board and then to the city council, and finalize a report for the PSC or the applicable filing process. No formal vote or motion was taken at the workshop.