WSR 12-17-047

PERMANENT RULES

UTILITIES AND TRANSPORTATION

COMMISSION

[ Docket UW-120246, General Order R-566 -- Filed August 9, 2012, 9:42 a.m. , effective September 9, 2012 ]

In the Matter of Amending WAC 480-110-205 and 480-110-255, relating to water companies.

1 STATUTORY OR OTHER AUTHORITY: The Washington utilities and transportation commission (commission) takes this action under Notice No. WSR 12-11-131, filed with the code reviser on May 23, 2012. The commission has authority to take this action pursuant to RCW 80.01.040, 80.04.160, and 80.04.010 (30)(b).

2 STATEMENT OF COMPLIANCE: This proceeding complies with the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 43.21C RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).

3 DATE OF ADOPTION: The commission amends and adopts WAC 480-110-205 Application of rules and 480-110-255 Jurisdiction on the date this order is entered.

4 CONCISE STATEMENT OF PURPOSE AND EFFECT OF THE RULE: RCW 34.05.325(6) requires the commission to prepare and publish a concise explanatory statement about an adopted rule. The statement must identify the commission's reasons for adopting the rule, describe the differences between the version of the proposed rules published in the register and the rules adopted (other than editing changes), summarize the comments received regarding the proposed rule changes, and state the commission's responses to the comments reflecting the commission's consideration of them.

5 The commission amends WAC 480-110-205 Application of rules and 480-110-255 Jurisdiction, increasing the maximum average annual revenue per customer used to determine commission jurisdiction over water companies from $471 to $557. The requested rule making is beneficial to, or requested or supported by, the small businesses that it affects. The proposed rules would benefit small water companies (less than one hundred customers in the aggregate). Such companies should not be subject to commission jurisdiction unless their size or average annual revenues justify regulation. The revenue figure in the existing rule no longer reflects an appropriate jurisdictional threshold, and revising that amount would be beneficial to the small water companies that the commission currently does not regulate. There are no differences between the text of the proposed rules as published in the register and the text of the rules as adopted. The commission designates the discussion in this order, including Appendix A, as its concise explanatory statement.

6 REFERENCE TO AFFECTED RULES: This order amends WAC 480-110-205 Application of rules and 480-110-255 Jurisdiction.

7 PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: In accordance with RCW 34.05.330 (1)(b),1 the commission did not file a preproposal statement of inquiry.


1 RCW 34.05.330 (1)(b) states the agency may "initiate rule-making proceedings in accordance with RCW 34.05.320."

8 On November 11, 2011, MacKaye Harbor Water Company, Inc. (MacKaye), filed with the commission a petition, pursuant to RCW 34.05.330, requesting the commission initiate a rule making to amend WAC 480-110-205 Application of rules and 480-110-255 Jurisdiction, to increase the maximum average annual revenue per customer used to determine commission jurisdiction over water companies.

9 On April 26, 2012, MacKaye filed a revised petition requesting to increase from $471 to $557 the maximum average annual revenue per customer a water company can generate before becoming subject to the commission jurisdiction.

10 The commission currently regulates investor-owned water companies that serve one hundred or more customers, or have average annual revenue of more than $471 per customer. The commission entered Order 01 on May 17, 2012, granting the amended petition and directing the filing of a notice of proposed rule making (CR-102) in accordance with RCW 34.05.330 (1)(b).

11 NOTICE OF PROPOSED RULE MAKING: The commission filed a CR-102 on May 23, 2012, at WSR 12-11-131. The CR-102 advised interested persons that the commission was proposing rules related to commission jurisdiction over water companies. The commission also informed persons of this proposal by providing notice of the subject and the CR-102 to everyone on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3) and by sending notice to all regulated water companies. In addition, the commission issued a press release on May 25, 2012, informing the general public of the pending rule making and seeking public comment. The commission posted the relevant rule-making information on its internet web site at http://www.utc.wa.gov/120246.

12 The commission scheduled this matter for oral comment and adoption under Notice No. WSR 12-11-131 at 1:30 p.m., Friday, July 27, 2012, in the Commission's Hearing Room, Second Floor, Richard Hemstad Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. The notice provided interested persons the opportunity to submit written comments to the commission.

13 WRITTEN COMMENTS: The commission received one comment in support of the rule making from Mr. Richard Finnigan. Mr. Finnigan stated that he works with several unregulated water systems with fewer than one hundred customers, they are all having financial difficulties, and he believes raising the threshold to $557 will be helpful to those companies.

14 RULE-MAKING HEARING: The commission considered the proposed rules for adoption at a rule-making hearing on Friday, July 27, 2012, before Chairman Jeffrey D. Goltz, Commissioner Patrick J. Oshie, and Commissioner Philip B. Jones. The commission heard oral comments from three interested persons, none of whom addressed the proposed rule itself. Two commenters suggested that the commission should on its own motion, annually update the maximum average annual revenue per customer that a water company can generate before becoming subject to commission jurisdiction, while the other commenter expressed concerns with water regulation in general. No other interested person made oral comments.

15 COMMISSION ACTION: After considering all of the information regarding this proposal, the commission finds and concludes that it should amend the rules as proposed in the CR-102 at WSR 12-11-131.

16 STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: After reviewing the entire record, the commission determines that WAC 480-110-205 and 480-110-255 should be amended to read as set forth in Appendix A, as rules of the Washington utilities and transportation commission, to take effect pursuant to RCW 34.05.380(2) on the thirty-first day after filing with the code reviser.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 2, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.

ORDER


17 THE COMMISSION ORDERS:

18 WAC 480-110-205 and 480-110-255 are amended to read as set forth in Appendix A, as rules of the Washington utilities and transportation commission, to take effect on the thirty-first day after the date of filing with the code reviser pursuant to RCW 34.05.380(2).

19 This order and the rule set out below, after being recorded in the register of the Washington utilities and transportation commission shall be forwarded to the code reviser for filing pursuant to chapters 80.01 and 34.05 RCW and 1-21 WAC.

20 DATED at Olympia, Washington, August 9, 2012.

Washington Utilities and Transportation Commission

Jeffrey D. Goltz, Chairman

Patrick J. Oshie, Commissioner

Appendix A

WAC 480-110-205 and 480-110-255 Amended Rules

OTS-4795.1


AMENDATORY SECTION(Amending Docket No. UW-040375, General Order No. R-519, filed 4/4/05, effective 5/5/05)

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 (Jurisdiction). This includes investor-owned water companies that meet the jurisdictional threshold of serving one hundred or more customers or have average revenue of more than ((four)) five hundred ((seventy-one)) fifty-seven dollars per customer per year.

[Statutory Authority: RCW 80.01.040, 80.04.160 and 80.04.010. 05-08-099 (Docket No. UW-040375, General Order No. R-519), 480-110-205, filed 4/4/05, effective 5/5/05. Statutory Authority: RCW 80.01.040, 80.04.160, 81.04.160 and 34.05.353. 05-06-051 (Docket No. A-021178 and TO-030288, General Order No. R-518), 480-110-205, filed 2/28/05, effective 3/31/05. 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.]


AMENDATORY SECTION(Amending Docket No. UW-040375, General Order No. R-519, filed 4/4/05, effective 5/5/05)

WAC 480-110-255   Jurisdiction.   (1) The commission only regulates investor-owned water companies that:

(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 have average revenue of more than ((four)) five hundred ((seventy-one)) fifty-seven dollars per customer per year.


If a water company serves customers and has average annual revenue per customer commission regulation
99 or less $((471)) 557 or less No
99 or less more than $((471)) 557 Yes
100 or more $((471)) 557 or less Yes
100 or more more than $((471)) 557 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)) five hundred ((seventy-one)) fifty-seven 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 are billed on a recurring basis, other than contributions in aid of construction. For example, this includes money billed for flat-rate service or the metered base-charge and all usage charges.

(a) The commission does not include charges 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 2004 through January 2005.

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


Example: Customer A billed $340.
Customer B 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 billed the customers during the twelve-month period.


Example:
Billed by the Water Company During the

Twelve-Month Period

Customer A $340
Customer B + $283
Total 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 Billed During the Twelve-Month Period" by the "Total Months Received Water Service During the Twelve-Month Period."


Example:
Total 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 Billed
2004 February $20 $4 $24
2004 March $20 $5 $25
2004 April $20 $2 $22
2004 May $25 $5 $30
2004 June $25 $6 $31
2004 July $25 $12 $37
2004 August $25 $6 $31
2004 September $25 $4 $29
2004 October $25 $4 $29
2004 November $25 $3 $28
2004 December $25 $2 $27
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 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 Billed
2004 February $7 $7
2004 March $7 $7
2004 April $12 $12
2004 May $300 $4,500 $25 $5 $4,830
2004 June $25 $4 $29
2004 July $25 $3 $28
2004 August $25 $12 $37
2004 September $25 $10 $35
2004 October $25 $15 $40
2004 November $25 $5 $30
2004 December $25 $2 $27
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 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, 80.04.160 and 80.04.010. 05-08-099 (Docket No. UW-040375, General Order No. R-519), 480-110-255, filed 4/4/05, effective 5/5/05. 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.]