Agenda Date:         April 12, 2000
Item Number:                           
Dockets:                      UW-000126
Company Name:           Harbor Springs Water Company, Inc.
Staff:                             Danny Kermode, Revenue Requirements 
Specialist
                                     Penny Hansen, Public Involvement 
Coordinator
                                   
Recommendations: 
Dismiss the Complaint and Order Suspending the Tariff Revisions in Docket 
UW-000126 and allow the proposed rates to become effective on May 1, 2000. 
Discussion: 
On November 30, 1999, Harbor Springs Water Company, Inc., (Company) filed for a 
general rate increase in Docket UW-991863. The company requested increased 
annual revenues of $38,900 or 108 percent. On December 29, 1999, the Commission 
issued a Complaint and Order suspending the tariff revisions. On February 1, 
2000, Harbor Springs Water Company, Inc., filed a request to withdraw its 
filing dated November 30, 1999, (UW-991863). Simultaneously, the Company filed 
revised rates (UW-000126) which proposed to increase annual revenues by $19,650 
or 54.8 percent and requested Less Than Statutory Notice (LSN) treatment.
Harbor Springs serves approximately 103 residential customers in Pierce County 
near the city of Gig Harbor. In the filing that the Company withdrew, the 
Commission received 43 letters and one petition with 79 signatures opposed to 
the proposal. Customers believed the proposal was exorbitant, however, they 
recognized that a smaller increase may be warranted. No additional comments 
have been received in this docket. 
At the February 23, 2000, open meeting, Staff presented their recommendation 
that the revised rates be approved and the request for withdrawal be approved. 
After hearing public comments, the Commission had questions regarding the 
management and operations of the Company. The Company, however, had failed to 
send a representative to the open meeting, therefore, no one was available to 
address the concerns and questions of the Commission. On February 23, 2000, the 
Commission approved the withdrawal of Docket UW-991863 and issued a Complaint 
and Order suspending the tariff revisions in Docket UW-000126. 
On March 27, 2000, the company filed a document titled "proposed settlement" in 
which the Company attempts to answer some of the concerns voiced by customers 
and Commissioners at the February 23rd open meeting. The proposed settlement 
addresses the Company's plans to resolve the low water pressure problems and 
the numerous problems identified in the letter from the Department of Health 
dated February 17, 2000. Within their proposal, the Company details time lines 
for resolving their problems. The Company has signed a Staff prepared 
stipulation agreement where the Company has agreed to complete the specified 
projects within the time frames set out in the Company's filed proposal. 
Failure to complete the projects within the stipulated period would subject the 
Company to penalties.
The Company's proposed filing is to recover its increased costs of operating 
and maintaining the water system. The increased cost related to the Satellite 
Management Agency (Peninsula Light Company) alone accounts for 38 percent of 
the proposed increase. In addition, costs associated with the Company = s 
increased investment in water plant installed over the last few years need to 
be recovered through increased rates. The Company has invested almost $70,000 
in additional utility plant since its last rate adjustment. 
In its analysis, Staff removed costs related to the non-business use of the 
Company owner's personal vehicle along with removing excess depreciation 
expense not related to providing water service. Legal and accounting costs were 
also reduced to reflect actual expenses for the period.
The current and proposed rates are provided below:
                                                                                
Proposed in                  Filed in
Monthly Rates:                                    Current          UW 
000126                   UW 991863 
Flat Rate Service                           $          29.00          $ 
60.40                  $ 44.85
Percent increase                                                               
108.4%                  54.8%
The Company = s proposed rates will produce $19,650 (54.8% increase) in 
additional revenue. Staff has determined that the proposed rates are fair, 
just, reasonable, and sufficient. Staff also believes the stipulation signed by 
the Company will result in the necessary improvements raised by customers. 
Staff is concerned that proceeding to hearing would result in further increased 
rates as a result of litigation and consulting costs. Staff believes that using 
the stipulation in lieu of a hearing will result in less costs being passed 
through to the customers in the form of higher rates. The results of Staff's 
investigation are shown on Attachment 1.
Therefore, Staff recommends that the Commission dismiss the Complaint and Order 
Suspending the Tariff Revisions in Docket UW-000126 and allow the proposed 
rates to become effective on May 1, 2000.