Original Notice.

     Preproposal statement of inquiry was filed as WSR 04-08-132.

     Title of Rule and Other Identifying Information: WAC 480-110-255 Jurisdiction and 480-110-205 Application of rules, for water companies, the proposed amendments would increase the maximum average annual revenue per customer jurisdictional threshold for water companies to reflect the latest final implicit price deflator of the United States Department of Commerce at the time of adoption, pursuant to RCW 80.04.010. In addition, proposed changes to WAC 480-110-255 would clarify the accounting methodology in computing the revenue threshold.

     Hearing Location(s): Commission Hearing Room 206, Second Floor, Chandler Plaza Building, 1300 South Evergreen Park Drive S.W., Olympia, WA 98504, on March 16, 2005, at 9:30 a.m.

     Date of Intended Adoption: March 16, 2005.

     Submit Written Comments to: Carole J Washburn, Secretary, P.O. Box 47250, Olympia, WA 98504, e-mail Records@wutc.wa.gov, fax (360) 586-1150, by February 23, 2005. Please include Docket No. UW-040375 in your communication.

     Assistance for Persons with Disabilities: Contact Ms. Mary DeYoung by March 9, 2005, TTY (360) 586-8203 or (360) 664-1133.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposal would raise the jurisdictional revenue threshold as provided in RCW 80.04.010 to reflect a threshold revenue level that uses the latest final index number at the time of adoption. The draft rules reflect the final 3rd quarter 2004 index number released December 22, 2004, which would result in a $468 threshold. This threshold may change at the time of the adoption based on the latest final implicit price deflator of the Department of Commerce. The proposal would allow nonregulated companies to increase revenue up to the threshold amount without becoming subject to commission regulation.

     Reasons Supporting Proposal: The proposal would update the current jurisdictional threshold of $429, set on December 31, 1999, clarify the accounting methodology for computing the revenue threshold, and allow unregulated companies to increase revenue up to the threshold amount and still remain outside the commission's jurisdiction.

     Statutory Authority for Adoption: RCW 80.01.040, 80.04.160, and 80.04.010.

     Statute Being Implemented: Not applicable.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Washington Utilities and Transportation Commission, governmental.

     Name of Agency Personnel Responsible for Drafting: Danny Kermode, Reg. Analyst, 1300 South Evergreen Park Drive, Olympia, WA 98504, (360) 664-1253; Implementation and Enforcement: Carole J. Washburn, Secretary, 1300 South Evergreen Park Drive, Olympia, WA 98504, (360) 664-1174.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed corrections and changes to rules will not result in or impose an increase in costs to water companies. Because there will not be any increase in costs resulting from the proposed rule changes, a small business economic impact statement is not required under RCW 19.85.030(1).

     A cost-benefit analysis is not required under RCW 34.05.328. The commission is not an agency to which RCW 34.05.328 applies. The proposed rule is not a significant legislative rule of the sort referenced in RCW 34.05.328(5).

January 31, 2005

Carole J. Washburn

Executive Secretary

OTS-7773.1

AMENDATORY SECTION(Amending Order R-467, Docket No. UW-980082, filed 11/30/99, effective 12/31/99)

WAC 480-110-205   Application of rules.   The rules in this chapter apply to any water company that distributes, sells, or supplies water, and that meets requirements for commission regulation or jurisdiction under RCW 80.04.010 and WAC 480-110-255. This includes investor-owned water companies that meet the jurisdictional threshold of serving one hundred or more customers or receive average revenue of four hundred ((twenty-nine)) sixty-eight dollars or more per customer per year.

[Statutory Authority: RCW 80.01.040. 99-24-100 (Order R-467, Docket No. UW-980082), § 480-110-205, filed 11/30/99, effective 12/31/99.]

     (a) Own, operate, control, or manage one or more water systems; except that control or management does not include management by a satellite management agency as defined in chapter 70.116 RCW if the satellite management agency is not an owner of the water company.

     (b) Meet jurisdictional thresholds of one hundred or more customers, or ((receive)) has average revenue of more than four hundred ((twenty-nine)) sixty-eight dollars per customer per year.

If a water company serves customers	and ((receives)) has average annual revenue per customer	commission regulation
99 or less	$468 or less ((than $429))	No
99 or less	(($429 or)) more than $468	Yes
100 or more	$468 or less ((than $429))	Yes
100 or more	(($429 or)) more than $468	Yes

     (2) The commission does not regulate the following providers of water service:

     (a) Cities, towns, or counties.

     (b) Public utility districts.

     (c) Water districts.

     (d) Local improvement districts.

     (e) Homeowner associations, cooperatives and mutual corporations, or similar entities that provide service only to their owners or members.

     (f) Homeowner associations, cooperatives and mutual corporations, or similar entities that provide service to nonmembers unless they serve one hundred or more nonmembers, or charge nonmembers more than four hundred ((twenty-nine)) sixty-eight dollars average annual revenue per nonmember.

     (g) Entities or persons that provide water only to their tenants as part of the business of renting or leasing.

     This may include:

     (i) Apartment buildings.

     (ii) Mobile home parks.

     (iii) Manufactured home rental communities.

     (iv) Office complexes.

     (v) Commercial or industrial parks.

     (3) To determine jurisdiction, the commission considers only those customers receiving water. The commission does not consider customers who do not receive water, such as customers who have paid:

     (a) Water-availability letter fees.

     (b) Standby charges.

     (c) System-readiness fees.

     (d) Ready-to-serve charges.

     (4) To calculate the average annual revenue per customer, the commission considers only the charges that water-receiving customers ((pay on a monthly)) are billed on a recurring basis, other than contributions in aid of construction. For example, this includes money ((paid)) billed for flat-rate service or the metered base-charge and all usage charges.

     (a) The commission does not include charges ((paid by)) billed to customers who do not receive water, such as:

     (i) Water availability letter fees.

     (ii) Standby charges.

     (iii) System-readiness fees.

     (iv) Ready-to-serve charges.

     (b) The commission does not consider contributions in aid of construction in determining jurisdiction. These contributions can be money, services or property. Payments can be made in a lump sum or financed over time. Examples of contributions in aid of construction include payments for:

     (i) Connection to system.

     (ii) Meter installation.

     (iii) System buy-in.

     (iv) Facilities charges.

     (v) Assessments for capital plant and equipment.

     (5) The following example shows how to calculate the average annual revenue per customer for two hypothetical customers. The data for each customer are provided at the end of the example:

     (a) Select the most recent twelve consecutive months.

Example:

February ((1999)) 2004 through January ((2000)) 2005.

     (b) For each customer who received water service during the twelve-month period, add the amount the customer ((paid to)) was billed by the water company for items other than contribution in aid of construction items.

Example:	Customer A ((paid)) billed $340.
	Customer B ((paid)) billed $283.

     (c) For each customer who received water service during the twelve-month period, add the number of months the customer received water service.

Example:	Customer A received water service for twelve months.
	Customer B received water service for nine months.

     (d) Total the amount ((paid by)) billed the customers during the twelve-month period.

Example:
		((Paid to)) Billed by the Water Company During the Twelve-Month Period
	Customer A		$340
	Customer B	+	$283
	Total ((Paid)) Billed During Twelve- Month Period		$623

     (e) Total the number of months each customer received water service.

Example:
		Number of Months Received Water Service During the Twelve-Month Period
	Customer A		12
	Customer B	+	9
	Total Months Received Water Service During the Twelve-Month Period		21

     (f) Calculate the "Average Monthly Revenue Per Customer": Divide the "Total ((Paid)) Billed During the Twelve-Month Period" by the "Total Months Received Water Service During the Twelve-Month Period."

Example:
	Total ((Paid)) Billed During the Twelve-Month Period			$623
	Total Months Received Water Service During the Twelve-Month Period		÷	21
	Average Monthly Revenue Per Customer			$29.67

     (g) Calculate the "Average Annual Revenue Per Customer": Multiply the "Average Monthly Revenue Per Customer" times 12 months.

(A)	Average Monthly Revenue Per Customer		$29.67
	Months in a Year	x	12
(B)	Average Annual Revenue Per Customer		$356.04

DATA USED IN THE EXAMPLE TO CALCULATE AVERAGE ANNUAL REVENUE PER CUSTOMER
Example -- Customer A
		Standby Charge	Ready-to- Serve Charge	Connection Charge	Facilities Charge	Meter Base Charge	Meter Usage Charge
Receive Water Service		No	No	Yes	Yes	Yes	Yes
Contribution in Aid of Construction		No	No	Yes	Yes	No	No
									Total
Year	Month								((Paid)) Billed
((1997)) 2004	February					$20	$4		$24
((1997)) 2004	March					$20	$5		$25
((1997)) 2004	April					$20	$2		$22
((1997)) 2004	May					$25	$5		$30
((1997)) 2004	June					$25	$6		$31
((1997)) 2004	July					$25	$12		$37
((1997)) 2004	August					$25	$6		$31
((1997)) 2004	September					$25	$4		$29
((1997)) 2004	October					$25	$4		$29
((1997)) 2004	November					$25	$3		$28
((1997)) 2004	December					$25	$2		$27
((1998)) 2005	January					$25	$2		$27
		$0	$0	$0	$0	$285	$55		$340
	Number of months service					12
Not Receiving Water									$0
Receiving Water - Contribution in Aid of Construction									$0
Receiving Water - Other than Contribution in Aid of Construction									$340
Total customer ((paid)) billed during period									$340

DATA USED IN THE EXAMPLE TO CALCULATE AVERAGE ANNUAL REVENUE PER CUSTOMER
Example -- Customer B
		Standby Charge	Ready-to- Serve Charge	Connection Charge	Facilities Charge	Meter Base Charge	Meter Usage Charge
Receive Water Service		No	No	Yes	Yes	Yes	Yes
Contribution in Aid of Construction		No	No	Yes	Yes	No	No
									Total
Year	Month								((Paid)) Billed
((1997)) 2004	February	$7							$7
((1997)) 2004	March	$7							$7
((1997)) 2004	April		$12						$12
((1997)) 2004	May			$300	$4,500	$25	$5		$4,830
((1997)) 2004	June					$25	$4		$29
((1997)) 2004	July					$25	$3		$28
((1997)) 2004	August					$25	$12		$37
((1997)) 2004	September					$25	$10		$35
((1997)) 2004	October					$25	$15		$40
((1997)) 2004	November					$25	$5		$30
((1997)) 2004	December					$25	$2		$27
((1998)) 2005	January					$25	$2		$27
		$14	$12	$300	$4,500	$225	$58		$5,109
	Number of months service					9
Not Receiving Water									$26
Receiving Water - Contributions in Aid of Construction									$4,800
Receiving Water - Other than Contribution in Aid of Construction									$283
Total customer ((paid)) billed during period									$5,109

     (h) To ensure that all customers are treated equitably, the commission will impute the same rates to any customers receiving free or reduced service that apply to other customers receiving comparable service on the same system.

[Statutory Authority: RCW 80.01.040. 00-17-135 (General Order No. R-473, Docket No. UW-991634), § 480-110-255, filed 8/21/00, effective 9/21/00; 99-24-100 (Order R-467, Docket No. UW-980082), § 480-110-255, filed 11/30/99, effective 12/31/99.]

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