(item:11:55098, Chairwoman Jackson calls merits hearing to order) This meeting of the Public Utility Commission of Texas
will come to order. For the Merits Hearing in Docket
No. 55098, which has been duly posted with the Secretary
of the State of Texas for June 15, 2023. I will now
turn it over to our Commission ALJ for the Administration
of the Hearing. (item:11:55098, Commission ALJ lays out docket on petition for appointing a temporary manager for Channel Oaks WS) Good morning Commissioners. I call
to order Docket No. 55098, which is Commission Staff's
petition for an order appointing a temporary manager
for Channel Oaks Water System LLC. Continuing until
the Commission orders otherwise or until a receiver
is appointed by the appropriate court. My name is Katie
Marks, assisting the Commissioners. And the purpose
of this Hearing is to determine whether a temporary
manager should be appointed. We had a prehearing conference
yesterday and I admitted the 14 exhibits prefiled
by Commission Staff on June 5, 2023. I also admitted
the 3 exhibits for Channel Oak, Oaks which are the
3 items filed by Channel Oaks on June 6, 2023.
At this time, we'll take the appearances of the party
starting with Commission Staff.
Good morning. I'm sorry.
(item:11:55098, Introductions from Mildred Anaele, Commission Staff & Pauline Jones, Channel Oaks WS) Good morning, Mildred Anaele for Commission Staff.
For the utility? Oh, I'm sorry. Pauline Jones, uh
Channel Oaks Water System. Um, we will move into opening
statements, Commission Staff. Good morning here. Um,
(item:11:55098, Opening statement from Mildred Anaele, Commission Staff) we are here this morning to address Staff's petition
to appoint a temporary manager to Channel Oaks Water
System, LLC. Uh, and I will refer to them as COWS moving
forward. Um, on May 2, 2023, the Commission issued an
order modifying the emergency uh, emergency order issued
by the Executive Director in this matter. On February
23, 2023, ordering COWS to file a sworn affidavit
stating the, stating the identity of an individual who
has the authority to manage COWS. COWS has failed to
file such an affidavit or otherwise identify a manager
of COWS. Additionally on May 25, 2023, the Commission
requested the Attorney General's Office bring suit
to appoint a receiver. Because of COWS's failure to comply
with the Commission's order, requiring it to identify
a manager. And because the process to appoint a receiver
may likely be a lengthy one. Commission Staff is requesting
that the Commission issue an order identifying CSWR
Texas as temporary manager of Channel Oaks. For a
time period identified by the Commission or until a
receiver is appointed. To ensure the continued operation
of the utility and provision of continuous and adequate
service to the customers.
(item:11:55098, ALJ Marks swears in Pauline Jones, with Channel Oaks WS) Uh, Miss Jones. Yesterday, we discussed your capacity
with the water system and your role as a representative
here today. Given your position, I'm gonna go ahead
and swear you in before we move into your opening statement.
Um, if you'll raise your right hand and state your
name for the record, please. Pauline Jones. Do you swear or
affirm to tell the truth, the whole truth and nothing
but the truth in this proceeding? I do. Thank you. You
may proceed with an opening statement, if you have one.
(item:11:55098, Opening Statement from Pauline Jones, Channel Oaks WS) Um my only statement is that um, uh. On May 11, uh
Mary Maxey with the Channel Oaks Water System, uh the
managing member of the LLC. Filed an affidavit indicating
that Channel Oaks Water System had agreed to work with
PUC. To secure an entity qualified to take over the
Channel Oaks Water System. Um that Pauline Jones, Keith
Jones and Aaron Johnson, a Class B licensed operator.
Have been identified as the new operators responsible
for managing the utility. Um on May 16th, the PUC
came out and discussed with property owners from Channel
Oak subdivision. The um procedures that would be required
to complete a sale, transfer, merger of the CCN. And
explained that it could take up to a year to complete
that actual transfer over. Um we feel like that we
have identified the individual responsible to manage
the utility and we have not violated the Commission's
final order in Docket No. 54678.
The Channel Oaks Water System was never notified. That
the PUC was requesting that the Attorney General
bring suit against Channel Oaks Water System for the
appointment of a receiver. Um I personally, Pauline
Jones. Met with Phyllis Brown, who was contracted by
the PUC. To ensure compliance on all billing and record
keeping issues with managing the water system. Um I
trained with her. I have been working with Channel
Oaks Water System since October of 2021. When PGMS
was managing the system. And is responsible for all
of the violations that we had leading up to there,
uh removal or walk away from the system. And um I have
been instrumental in bringing the water system into
compliance with the TCEQ, the Groundwater Commission
and the PUC. Since um I took over the water
system in February, February 8th of 2023. Um I have
been working through the legal issues. Surrounding the
Brian Maxey, DBA Channel Oaks Water System. That currently
owns the CCN. And the uh max the assets, the assets
from the Mac, Brian Maxey estate were not distributed
properly. To the heirs or beneficiaries before closing
the estate. And Channel Oaks Water System CCN and all
assets of the Channel Oaks Water System. Should have
been transferred out of the DBA at Brian Maxey's death.
Um Mary Maxey and Carolyn Maxey have both stated that
they are not the owner or the operator of the water
system. And Channel Oaks Water System, LLC has been managing
and operating the water system, and has been providing
adequate water service to water customers. Um we are
committed to continuing to work directly with the PUC.
To secure an entity qualified to take over the CCN.
Thank you. Uh we'll move into the witnesses. (item:11:55098, Commission Staff and Channel Oaks WS state they do not have any witnesses) Commission
Staff, do you have any witnesses? No, we do not. Ms.
Jones, do you have any additional witnesses? No, I
do not. Thank you. Commissioners, do you have any questions?
Yes. I, I have a few questions. Oh, sorry. You said
Commissioners. Oh, I apologize. (item:11:55098, Commissioner McAdam's has a question for Commission Staff) As to the issue of notice um are, are they
required to be noticed? No. Okay.
There will be (inaudible) one of the petition to appoint
a reserve as follow. I understand. Yeah. Okay.
Any other questions, Commissioners? I don't think so. Um, we'll move
into closing statements.
(item:11:55098, Closing statement from Mildred Anaele with Commission Staff) Once again, um Commissioners. We are requesting that
the Commission issue an order to appoint TSWR as
temporary manager. Until the receivership process is
concluded at the appropriate court. Uh, the evidence
on the record, shows that COWS failed to comply with
the Commission issued order uh, in Docket 54678. Not
once but twice. Um which require COWS to identify
the appropriate individual. Um they state that they
did, but they did not specifically say who was to manage.
They listed people, but they did not list who was the
manager. Um
because of the continued ambiguity, uh ambiguity.
Um that remains as to who is in charge um of ensuring
the as who is in. Sorry. Let me restart that. No problem.
Um because of the continued ambiguity that remains
as to who is in charge. Of ensuring the continued operation
of the utility and the provision of continuous and
adequate service to the customers. And because CSR
uh, CSWR stands willing and able to temporarily manage
COWS, and for the benefit of the customers in general.
Commission Staff requests that the Commission issue
an order appointing CSWR as temporary manager of COWS,
effective today, June 15, 2023. Continuing until the
Commission orders otherwise or until a receiver is
appointed. Thank you. Miss Jones, do you have a closing
statement? Yes. (item:11:55098, Closing statement from Pauline Jones with Channel Oaks WS) Um my only statement here. Is that um
in February, CSWR we spoke with Sean Nichols. And
uh tried to have him take over the temporary management
and operation of COWS. Um when, when he contacted Ms.
Maxey back in February. Um they could have saved the
homeowners and myself a lot of time and energy. But
they were not willing to provide a licensed water operator
or take over the management, until they owned the utility.
It is now in the statement from the uh that, that's
in the docket. That Mr. uh Todd Thomas intends to purchase
Channel Oaks through a STM proceeding. With the
PUC, um he made that statement on June 1, in the
docket filings. And my question is this if, if he
is interested in purchasing and doing a sale transfer
man, uh merger. Then why not allow us the opportunity
as the water system owner of the CCN for the last 20
years. Although the PUC states that we don't own
it because it's in Brian Maxey's name, instead of the
LLC. Why not negotiate with us and let us. We're more
than happy to do a sale transfer, merger and sign it
over to CSWR. But I don't want to give it
away. And if it's gonna go into receivership, then
so be it. But I don't feel I need a temporary manager,
to come in here and take over my business and run it.
And for the property owners, I am providing that service
for the property owners. I have been billing, I have
put the TCEQ charges. I have done everything that
the Public Utility Commission has asked me to do. And
I don't see any reason. If they take it over with receivership,
then so be it. We'll turn it over. But I don't see
any reason to authorize them to come in and take over.
And do what meter readings and billing? We're already
doing that. So that's my statement. Thank you. If there's
nothing else from anyone? One question of Staff. Has
service meaningfully uh improved since this entire
process began? I would like to ask um Celia (inaudible) to
also step up. Great. But she'll have more information.
Good morning. Will you please state your name for the
record? Celia Eves for Commission Staff Division
of Utility Outreach. I'm gonna swear you in as
a witness. Uh, please raise your right hand. Do you
swear, affirm to tell the truth, the whole truth and
nothing but the truth in this proceeding? I do. Thank
you.
(item:11:55098, Commissioner McAdams' follow-up question to Commission Staff) Has the question is, has service meaningfully improved
since the PUC process was initiated? (item:11:55098, Celia Eves with Commission Staff) Since the PUC
process, uh since we've uh have been working with
the utility and stuff. You know we, we have sent out
since Ms. Jones stated uh assistance contract. There are pending
violations that we are aware of that are still pending
with the Texas Commission on Environmental Quality.
Um that I believe are are still relevant issues at
hand with regards to the continuous um an adequate
service related to providing service to the customers.
Um Ms. Jones stated that we, the division of utility
outreach as well as our public engagement, Mike Hogan and
stuff. We actually attended a meeting, held a meeting
with the customers of Channel Oaks Water. With regards
to um a lot of, I guess concerns from the customers.
About reliability, about understanding, about not understanding
what was going on. But as well as issues with regards
to how billing was occurring. As well as you know,
who they needed, who was going to respond to specific
requests for service. So there's a lot of, I guess
customer concern with that regard. We actually attended
that meeting. To try to make sure that we would clarify the
PUC's jurisdiction. With regards to trying to work to
ensure that there's continuous and adequate service.
With regards to the fact that because there is an entity
or someone out there. Representing that, you know, they
are providing service for compensation. There's still
the issue that this entity does not hold the CCN to
provide service. And as the record will show, what's
In the docket and stuff related to Docket 55098.
And it's actually Item No. 2, Exhibit 2 and
3. If you look at those exhibits, I think this
is part of the concern. With regards to trying to determine
what is going on and how we actually reach meaningful
resolution for the customers. And ensure that there's
continuous and adequate service. There's been a lot
of unfortunately, in the emails was very lengthy email
chain that's in that exhibit. With regards to who the
owner is. The Maxey family has had an ongoing dispute
about who actually is responsible for the utility. And
who actually has the authority to potentially sell
the assets of this utility. So the Division of Utility
Outreach, we have reached out to numerous neighboring
utilities. With regards to either doing temporary management,
interest in the utility. But the question remains that
even if we were to identify someone, potentially. There's
still the issue of who would be authorized to actually
transfer the assets. And because of that, you know
there is concern. That are we going to have someone
in place again to even address the transfer of the
utility. But also address even some of the violations
that are, that are related to what might be considered
significant infrastructure improvements. For instance and again,
this is not PUC, it's a Texas TCEQ compliance violation
with regards to well capacity. So there are improvements,
there are issues. With regards to whether the lines
are actually, that the lines actually are not properly
buried. And so there's obviously infrastructure upgrades
that need to be included and conducted with this utility.
So it's important to identify someone who's actually
going to have the ability to actually make those infrastructures
improvement. To ensure that there's going to be continuous
and adequate service to these customers. But again,
with regards to trying to work to find a long term
solution. You know, it potentially is again, someone
needs to have the authority to actually hold the CCN.
To legally be charging these customers and actually
have the ability to invest in the needed infrastructure
to ensure this continuous inadequate service.
Anything else? Thank you Judge. (item:11:55098, ALJ adjourns hearing) And we are adjourned. Thank
you.
(silence)
(item:11:55098, Chairwoman Jackson calls to adjourn merits hearing) Merit's Hearing in Docket 55098 is hereby adjourned
at 10:12am.