PERMANENT RULES
COMMISSION
STATUTORY OR OTHER AUTHORITY: The Washington Utilities and Transportation Commission takes this action under Notice No. WSR 99-03-074, filed with the code reviser on January 19, 1999. The commission brings this proceeding pursuant to RCW 80.01.040 and 80.04.160.
STATEMENT OF COMPLIANCE: This proceeding complies with the Open Public Meetings Act (chapter 42.30 RCW), the Administrative Procedure Act (chapter 34.05 RCW), the State Register Act (chapter 34.08 RCW), the State Environmental Policy Act of 1971 (chapter 34.21C [43.21C] RCW), and the Regulatory Fairness Act (chapter 19.85 RCW).
DATE OF ADOPTION: The commission adopted this rule on
February 26, 1999.
CONCISE STATEMENT OF PURPOSE AND EFFECT OF THE RULE: The proposed rules implement the requirements of Executive Order 97-02, requiring agencies to review rules for clarity, intent and statutory authority, need, effectiveness and efficiency, coordination, cost and fairness. The new rules incorporate and formalize policies, add requirements for customer notice for mergers or consolidations, and eliminate rules that are obsolete. The proposed rules require commission determination that a property is not necessary or useful if the property to be disposed of has a market value that exceeds the greater of .1% of rate base or $20,000. The proposed rules are intended to provide the public with timely notice and full disclosure of any information related to transfers of property which may impact the public interest.
New section WAC 480-143-100 defines the application of the rules and allows the commission to waive rule provisions upon written request of the public service company or upon the commission’s own motion.
New section WAC 480-143-110 defines the method of filing.
New section WAC 480-143-120 defines requirements for approval of transfers of property that is necessary or useful.
New section WAC 480-143-130 defines requirements for approval of a public service company’s purchase of property.
New section WAC 480-143-140 sets forth the general contents of transfer of property applications.
New section WAC 480-143-150 sets forth requirements for a company, other than a public service company, when it acquires property from a public service company.
New section WAC 480-143-160 provides the commission may determine a transfer of property application will be set for hearing.
New section WAC 480-143-170 allows the commission to deny a transfer of property application if it finds the transaction is not consistent with the public interest.
New section WAC 480-143-180 requires commission pre-determination of whether property is necessary or useful if the property to be disposed of has a market value that exceeds the greater of .1% of rate base or $20,000.
New section WAC 480-143-190 requires public service companies to report annually all property transferred without commission approval except items whose fair market value is less than the greater of .01% of rate base or $2,000.
New section WAC 480-143-200 sets forth the conditions when telephone leases are exempt from the requirements of chapter 480-143 WAC.
New section WAC 480-143-210 requires a public service company to provide notice to its customers when it merges or consolidates its facilities with another company and requires public service companies to provide the public with timely notice and full disclosure of any information which may impact the public interest.
REFERENCE TO AFFECTED RULES: This rule repeals the following sections of the Washington Administrative Code: WAC 480-143-010 Sale, lease or assignment of property, 480-143-020 Purchase of property, 480-143-030 Statement required of a nonutility, 480-143-040 Public hearing, 480-143-050 Transaction must be consistent with public interest, 480-143-060 Definition of property not necessary or useful, 480-143-070 Annual filing of property disposed of without authorization, 480-143-080 Certain telephone utility leases exempt, and 480-143-990 Form of verification for application.
PREPROPOSAL STATEMENT OF INQUIRY AND ACTIONS THEREUNDER: The commission filed a Preproposal Statement of Inquiry (CR-101) on July 1, 1998, at WSR 98-14-137.
ADDITIONAL NOTICE AND ACTIVITY PURSUANT TO PREPROPOSAL STATEMENT: The statement advised interested persons the commission was considering entering a rule making on rules relating to transfers of property. The commission also informed persons of the inquiry into this matter by providing notice of the subject and the CR-101 to persons on the commission's list of persons requesting such information pursuant to RCW 34.05.320(3) and by sending notice to utility companies that are subject to these provisions. The commission accepted written comments regarding the CR-101 through July 31, 1998.
Pursuant to notice, the commission held one stakeholder meeting on August 31, 1998. The workshop participants included representatives from commission staff, US WEST Communications, Inc. (USWC), GTE Northwest Incorporated (GTE), Sprint Communications Company, Washington Independent Telephone Association (WITA), and Puget Sound Energy Company (Puget). Participants met in a workshop to address the potential rule making and comments that some of the participants had filed. Staff mailed out a letter and a rule discussion draft on November 9, 1998.
NOTICE OF PROPOSED RULE MAKING: The commission filed a Notice of Proposed Rule Making (CR-102) on January 19, 1999, at WSR # 99-03-074. The commission scheduled this matter for oral comment and adoption under Notice WSR 99-03-074 at 9:30 a.m., Wednesday, January 13, 1999, in the Commission's Hearing Room, Second Floor, Chandler Plaza Building, 1300 South Evergreen Park Drive S.W., Olympia, WA. The notice provided interested persons an opportunity to submit written comments to the commission.
COMMENTS: The commission received oral and written comments from Cascade Natural Gas Corporation (Cascade), GTE, the Industrial Customers of Northwest Utilities (ICNU), Puget, USWC, and WITA. After discussions with staff, Cascade withdrew its objections to the proposed rules.
Based on the comments received, commission staff suggested revised clarifying language that did not change the intent or ultimate effect of the proposed rule.
RULE-MAKING HEARING: The rule proposal was considered for adoption, pursuant to the notice, at the commission's regularly scheduled open public meeting on February 26, 1999, before Chairwoman Marilyn Showalter, Commissioner Richard Hemstad, and Commissioner William R. Gillis. The commission heard oral comments from Kathy Folsom, representing commission staff.
COMMISSION ACTION: After considering all of the information regarding this proposal, the commission adopts the proposed rules, with the changes described below.
CHANGES FROM PROPOSAL: The commission adopts the proposal with the following changes from the text noticed at WSR 99-03-074 (underlined text added).
Consistent with ICNU’s recommendation, the commission adds a provision to WAC 480-143-110 to allow for filing by mail or in person or as the commission may otherwise provide anticipating the future availability of other methods such as electronic filing.
Consistent with Puget’s recommendation the commission adds a provision in WAC 480-143-180 to clarify for companies that provide more than one utility service (e.g., gas and electric) the appropriate rate base against which to measure a property’s market value to determine whether the company must apply for a "necessary or useful" determination prior to any disposal. The commission adds to the rules the language for the applicable utility service.
Consistent with Puget’s recommendation the commission adds a provision in WAC 480-143-190 to clarify for companies that provide more than one utility service (e.g., gas and electric) the appropriate rate base against which to measure a property’s market value to determine whether the company must apply for a "necessary or useful" determination prior to any disposal. The commission adds to the rules the language for the applicable utility service.
The commission also adopts minor typographical changes.
SUGGESTIONS FOR CHANGE THAT ARE REJECTED: ICNU recommended that the transfer of property rules should prescribe specific methods of analysis. The commission rejects this recommendation. Rules should not be overly prescriptive and should allow for commission discretion. The commission may require specific analyses necessary and appropriate to a specific case.
Puget recommended that the commission modify WAC 480-143-180 to exclude disposals provided for in a commission order. The commission rejected this recommendation because orders deal with individual circumstances and rules are general guidelines. The rules appropriately require commission determination that property disposed of is not necessary or useful.
WITA recommended the filing threshold in WAC 480-143-180 be increased. The commission rejects this recommendation. Under the rule only properties with significant value require a filing prior to any disposal. The threshold adopted is reasonable.
Both WITA and GTE recommended that the reporting threshold in WAC 480-143-190 be increased. The commission rejects this recommendation because this provision raises the reporting threshold from current levels for all but the smallest companies. This provision is much less burdensome for companies but still provides pertinent information to the commission.
USWC recommended that WAC 480-143-210 be qualified to indicate that public notice is necessary only for property transfers where the public is directly affected. The commission rejects this recommendation because this provision only applies when a public service company merges or consolidates its franchises, property or facilities with another company. Customers should be notified when their service provider changes.
STATEMENT OF ACTION; STATEMENT OF EFFECTIVE DATE: In reviewing the entire record,
the commission determines that WAC 480-143-010, 480-143-020, 480-143-030, 480-143-040,
480-143-050, 480-143-060, 480-143-070, 480-143-080, and 480-143-990 should be repealed and
WAC 480-143-100, 480-143-110, 480-143-120, 480-143-130, 480-143-140, 480-143-150,
480-143-160, 480-143-170, 480-143-180, 480-143-190, 480-143-200, and 480-143-210 should
be adopted 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.
THE COMMISSION ORDERS:
1. WAC 480-143-010, 480-143-020, 480-143-030, 480-143-040, 480-143-050, 480-143-060, 480-143-070, 480-143-080, and 480-143-990 are repealed and WAC 480-143-100, 480-143-110, 480-143-120, 480-143-130, 480-143-140, 480-143-150, 480-143-160, 480-143-170, 480-143-180, 480-143-190, 480-143-200, and 480-143-210 are adopted 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).
2. This order and the rules set out in Appendix A, 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 chapter 1-21 WAC.
3. The commission adopts the commission staff memoranda, presented when the commission considered filing a preproposal statement of inquiry, when it considered filing the formal notice of proposed rule making, and when it considered adoption of this proposal in conjunction with the text of this order, as its concise explanatory statement of the reasons for adoption and for rejection of proposed changes, as required by RCW 34.05.025.
DATED at Olympia, Washington, this 31st day of March 1999.
Washington Utilities and Transportation Commission
Marilyn Showalter, Chairwoman
Richard Hemstad, Commissioner
William R. Gillis, Commissioner
OTS-2748.2
NEW SECTION
WAC 480-143-100
Application of rules.
The rules in this chapter apply to any public service company that meets the requirements for commission regulation or jurisdiction under RCW 80.04.010. The rules do not apply to a local exchange company that serves less than two percent of the access lines in the state of Washington.
The commission may waive or modify the application of any rule to a public service company upon written request or upon the commission's own motion, except when such provisions are fixed by statute. The waiver or modification must be approved by the commission in writing. Violations of these rules will be subject to the penalty provisions of chapter 80.04 RCW.
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Any filing under this chapter must be made at the commission by mail or in person or as the commission otherwise may provide.
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A public service company may not complete a transfer of property necessary or useful to perform its public duties unless the company first applies for, and obtains, commission approval. Transfers include sale, lease, assignment of all or part of a public service company's property, and merger or consolidation of a public service company's property with another public service company. Certain telephone utility leases are exempt under WAC 480-143-200. Applications must describe transfers in detail and must include the public service company's current financial statements and copies of all transfer instruments.
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A public service company may not acquire any franchise, property, facility, capital stock, or bonds of another public service company unless it first applies for, and obtains, commission approval. Applications must describe the proposed acquisitions in detail and include the public service company's current financial statements and copies of all transfer instruments.
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Applicants must state all facts that support each application. Each application must be dated and signed by the applicant, the applicant's authorized representative, or the applicant's attorney. Whoever signs the application must certify that the information it includes is true and correct to the best of the signer's information and belief under penalty of perjury as set forth in RCW 9A.72.085.
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If a company other than a public service company proposes to acquire franchises, property, or facilities from a public service company, the commission may require a sworn statement from the purchaser that includes any resulting changes in rates, services, or equipment that may affect the public interest.
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The commission will examine all applications for transfers and accompanying exhibits. The commission may set an application for hearing and require all parties to the transaction to appear and give testimony.
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If, upon the examination of any application and accompanying exhibits, or upon a hearing concerning the same, the commission finds the proposed transaction is not consistent with the public interest, it shall deny the application.
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A public service company must not dispose of any property necessary or useful to perform its public duties unless it first applies for, and obtains, written authority from the commission.
Necessary or useful includes all property except items that:
(1) Are substituted with or replaced by items of equal or greater value or usefulness;
(2) Are surplus and unneeded assets for which full value is received;
(3) Are obsolete; or
(4) Are excluded from the public service company's rate base by commission order, or otherwise.
The public service company must file an application for commission determination that the property is not necessary or useful, prior to disposing of such property, if the property to be disposed of has a market value that exceeds the greater of .1% of the public service company's rate base (for the applicable utility service) last established by commission order, or $20,000.
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Every public service company must file with the commission by March 1 of each year a detailed list of all items transferred without commission approval during the previous calendar year, except items whose fair market value is less than the greater of .01% of the public service company's last rate base (for the applicable utility service) established by commission order or two thousand dollars. The public service company must attach an affidavit by a responsible officer qualified to state that none of the items was necessary or useful to perform the public service company's public duties and that the public service company received fair market value for each item.
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A telephone utility may lease its properties to another telephone utility without prior commission approval if:
(1) The properties are not essential to the lessor's provision of telephone service;
(2) The properties are used to transmit interexchange messages between subscribers of different utilities;
(3) The lease expedites economical interexchange telephone service; and
(4) A copy of the lease agreement is kept in the lessor's office.
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(1) Whenever a public service company files an application to merge or consolidate any of its franchises, property or facilities with any other company, it must provide notice to customers. This notice must be provided thirty days before the commission's open meeting date when the application is scheduled for action.
(2) A draft customer notice must be submitted to the commission for review at least one week prior to the public service company's planned printing date for distribution.
(3) The public service company must provide a final copy of the notice to the commission.
(4) Content of notice. The notice to customers must contain, at a minimum, the following:
(5) The commission may require additional notice to the public as it determines necessary.
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The following sections of the Washington Administrative Code are repealed:
| WAC 480-143-010 | Sale, lease or assignment of property. |
| WAC 480-143-020 | Purchase of property. |
| WAC 480-143-030 | Statement required of a nonutility. |
| WAC 480-143-040 | Public hearing. |
| WAC 480-143-050 | Transaction must be consistent with public interest. |
| WAC 480-143-060 | Definition of property not necessary or useful. |
| WAC 480-143-070 | Annual filing of property disposed of without authorization. |
| WAC 480-143-080 | Certain telephone utility leases exempt. |
| WAC 480-143-990 | Form of verification for application. |