The West Virginia Public Service Commission (PSC) is insisting that Star City provide additional financial documentation concerning its water and sewer utilities before considering a merger with the Monongahela Valley Association (MUB). This request follows the filing of a joint petition on August 26, 2023, in which both Star City and MUB seek to consolidate Star City’s utility services with MUB’s larger network. If approved, the merger would lead to MUB fully and permanently acquiring Star City’s systems, including all tangible and fixed capital assets.
In early October 2023, PSC staff issued a memorandum recommending that the Commission not waive historical accounting requirements for this case. They emphasized that the application cannot be adequately evaluated without the requested financial information. Specifically, they are seeking a detailed financial analysis that supports the decision to pursue the merger, as well as the accounting history of franchises, licenses, and equipment that would be transferred.
MUB and Star City have countered this request, arguing that a financial analysis is unnecessary. They contend that the primary motivation for the acquisition is not financial but rather an effort to address environmental and efficiency issues. MUB noted that it does not require further accounting history of the assets since the relevant information is already included in Star City’s annual reports. Additionally, Star City clarified that MUB would not assume any existing debt nor issue any debt related to the proposed transaction.
Despite these objections, PSC staff remained firm in their stance. In a response dated Monday, they explained that the needed information is not present in the annual reports filed by either Star City or MUB. They indicated that producing this data should not be overly burdensome. “At a minimum, the petitioners should be required to provide the proposed journal entries as required by the Commission’s Rules of Practice and Procedure (Rule 10.5),” the memorandum stated. “When MUB acquires Star City, it will need to make adjusting journal entries. Staff is requesting that the petitioners include those entries as part of their filing in this case. This information will allow the Commission to maintain a proper record and understand how MUB will account for Star City’s assets.”
Star City Mayor Sharon Doyle has expressed the town’s commitment to cooperating with the PSC. “Star City will work with the Commission and provide any information that it may deem necessary to review and approve this merger. As it is in the best interests of Star City and the larger community, we anticipate ultimate approval by the PSC and we will continue to work to that end,” she stated.
In addition, Chris Dale, Communications Director for MUB, mentioned that all parties involved understand the process could take up to six months to complete. He added that these transactions are unlikely to extend beyond that timeline.
As the PSC prepares to evaluate the merger, the request for additional financial documentation underscores the complexities involved in consolidating utility services and ensuring transparency in the process. The outcome could significantly impact both Star City and the surrounding region, highlighting the balance between operational efficiency and regulatory scrutiny.
