KINGWOOD – Thirteen customers of Preston County Public Service District No. 1 turned out for a public hearing Monday evening regarding PSD1’s rate-increase request.
Preston County Commissioner Samantha Stone, who is also a PSD1 customer, provided two revelations during the public comment period. One, the employee who has been the subject of allegations of embezzlement has resigned. Their last day is March 25.
And two, the PSD1 board treasurer, who admitted at a board meeting that he has not fulfilled the duties of treasurer since he joined the board in June, has stepped down. Stone said his resignation is not related to his board duties but stems from a schedule conflict with his work.
Stone and PSD1 attorney Todd Swanson also confirmed that the state auditor’s office is conducting a forensic audit of the district’s finances. The audit should reveal any fraud or financial mismanagement – if there is any, Swanson said.
The state Public Service Commission ordered the hearing due to “substantial protest,” as PSC Administrative Law Judge Cecelia Jarrell – who presided over the hearing – termed it.
PSD1 serves about 1,540 customers in the Reedsville-Arthurdale-Masontown area. It’s rate-increase request has drawn 55 letters of protest, tied to allegations of financial mismanagement by the board, poor water quality and embezzlement.
The hearing took place in Preston County Commission chambers. Jarrell first opened the floor to public comment.
Arthurdale resident Penny Nicholson – a former PSD1 employee who has spoken at length with The Dominion Post – recounted incidents of theft by former employees and allegations of wrongful bonuses, overtime, and embezzlement (no charges have been filed regarding the alleged embezzlement and we are not reporting details or naming the employee).
Nicholson also detailed alleged misspending — such as failure to fix a broken riding mower with a simple welding job and instead contracting with a lawn care firm for about $6,000 per year.
“That’s our money just going out the window,” she said. “We just need an investigation. We need somebody who cares about our water company and just make it right.”
Jarrell then opened the hearing portion of the evening, taking testimony from PSC Utilities Analyst Geoffrey Cooke, who explained the PSC staff recommendation for a rate increase.
Cooke explained that PSD1, in its 2024 annual report, had total annual water operating revenues of $1,305,625. The proposed rate increase would bring in an additional $19,859 the district needs to cover operating expenses, debt service and contributions to its state-mandated Cash Working Capital Reserve fund for emergencies.
Under the staff proposal, the monthly residential rate would increase from $57.03 for the first 3,000 gallons to $57.8. This represents a 1.37% increase – 78 cents per month.
Commercial rates, based on an average of 7,400 gallons, would increase by $1.62 or 1.34%. Industrial rates, based on an average of 78,200 gallons, would increase by $9.38 or 1.33%.
Cooke said, in response to questions, that he visited the PSD1 office to conduct his audit – not the same as a forensic audit to detect fraud, as conducted by the state auditor – and met only with the office secretary, not the PSD1 board members or the district’s accountant.
Following Cooke’s testimony, Jarrell reopened the floor to public comment.
Customer Michelle Hatch said that from 2018 to 2023, monthly rates rose from $30.72 to $57.03. Apart of that was tied to transitioning to a new water supply, but the initial rate hike was supposed to be temporary. It wasn’t, and other hikes followed, leading to the current proposal.
Also, she said, up until 2022, PSD1 paid for independent audits, at about $6,500 apiece. For no good reason, she alleged, no audits were done in 2022 and 2023. She dismissed as excuses the brief loss of a board treasurer and some staff turnover – since staff aren’t involve in the audits.
Audits resumed, she said, 2024 with an enormous jump in cost – ranging from approximately $34,800 to $44,500.
“That was their own negligence,” she said.
She also referred to the now outgoing treasurer. “If the treasurer isn’t doing their job, who’s actually paying attention to the finances?”
State code says, “The treasurer is lawful custodian of all funds of the public service district and shall pay same out on orders authorized or approved by the board.” The now ex-treasurer said he never performed that duty. At the January meeting, board President Rodney Liston said they contract with an accountant to handle the finances.
Responding to Hatch, Jarrell said, “It sounds like you’re just unhappy with the way the board is operated.”
Hatch said, “The financial decisions, the lack of oversight. It’s just getting to be too much.”
Hatch offered the final comments, in her role as county commissioner and as a PSD1 customer.
Finding people to serve on the board is challenging, she said.
And with the public scrutiny and pressure that have arisen since October when the first allegations were filed, “I don’t think they really know what to do with it.”
Jarrell has called for a transcription of the hearing to be on her desk by March 19, and then parties can file comments by March 30. Her decision is due by April 9.
