Agenda Date: February 23, 2001 Item Number: Docket: UW-001657 Company Name: Gamble Bay Water, Inc. Staff: Jim Ward, Revenue Requirements Specialist Penny Hanson, Public Involvement Coordinator Recommendation: Issue an order Dismissing Complaint and Order Suspending the Tariff Revisions filed by Gamble Bay Water, Inc., in Docket UW-001657 and grant rates as filed to become effective March 1, 2001. Discussion: On October 30, 2000, Gamble Bay Water, Inc. (Company), filed tariff revisions with the Commission to implement a new surcharge. On November 29, 2000, the Commission suspended the tariff filing pending investigation. Gamble Bay Water, Inc., serves approximately 260 customers in Kitsap and Snohomish counties. The tariff revisions will cancel an expired surcharge ($2.70) and implement a new surcharge of $2.27 monthly. The new surcharge would apply to all customers and would be used to repay a loan over five (5) years. The loan is being used to pay for drilling a new well on the Johanson water system located in Kitsap County. The proposed cost of the new well is $27,500 and it will be used to replace an existing well source that has failed. The revenue impact per customer will be $27.24 per year. From the original notice to customers, the Commission received six consumer complaints and one petition. These complaints pertained to not being able to get a response from the Company. Commission staff discovered that the Company owners had moved to Oregon and had not provided the new address to customers or the Commission. Additionally, the Company owners have now established and provided a new mailing address and phone number to reach the Company in Oregon. Subsequently, the Commission received 13 complaints from consumers regarding billing, water outages without notification, water quality issues, and concerns about what they paid for connection charges. Commission Staff investigated these complaints. The Company corrected one billing error before a complaint was opened. Staff could not determine out of compliance on the Company's practice in notifying customers of scheduled outages. The Company agreed it was not responding to customer calls as required in the administrative code, 480-110-315. Staff addressed both issues with the Company and the Company now understands its obligations to its customers. Customers are experiencing some odor and sediment due to manganese in the water. However, Staff found that the Company is in compliance with the Safe Water Drinking Act standards. The Company charged customers a tax on their connection charges which is not included in its tariff. The Company has agreed to provide refunds to its customers. Staff has closed 12 complaints and continues to investigate one complaint regarding water quality issues. The proposed and revised rates are provided below: Monthly Rate Current Proposed Surcharge - Johanson Well N/A $ 2.27 This surcharge is to apply to all water customers served by the Company. It will expire on March 1, 2006, or upon recovery of $27,500 loan principal, plus interest charges, fees and state excise taxes, whichever occurs first. Several customers had concerns over paying a developer, not the Company, for ‘Water Rights Certificates.’ Prices for the certificates ranged from $1,000 several years ago to the current price of $4,450. Staff investigated this and found that the original developer of the subdivision had built a condition into his sale agreements and covenants that required the lot purchased to purchase a ‘Water Rights Certificate’ from the developer prior to receiving a water connection. These funds were received by the original developer and did not pass to or through the water Company. The water Company has charged for service connections and monthly water rates, according to tariffs filed with the Commission. Due to language in the original sales agreement to sell the water system, customers believe that the developer is responsible for upgrade and replacement costs and not them. Staff believes the activities of the developer are not regulated by this Commission and that this Commission has no jurisdiction over the developer and his activities. Staff has discovered that the original water right issued by Department of Ecology (DOE) has been exceeded by five connections. Additionally, due to the lack of water being produced by the well, Department of Health (DOH) has limited the total number of connections on this water system to the current number of 40 connections. Commission Staff discussed these issues with DOE and DOH. DOE and DOH are currently in discussions with each other to determine a permanent solution as to the allowed number of connections. As part of the surcharge approval, the Company will be required to provide quarterly reports of the surcharge funds until completion, as stated in the tariff conditions. Upon completion and use of the new well the Company will forward copies of all original vendor invoices and documents related to the cost of the well. The Company also acknowledges that any customer requesting water service, in the future, will be provided water service under Department of Health capacity limits and the Company will not insist on or enforce any additional developer or third party requirements. Regulatory Services Staff has completed its review of estimates to support the filing as set forth. Staff recommends that the Commission issue an order Dismissing Complaint and Order Suspending the Tariff Revisions filed by Gamble Bay Water, Inc., in Docket UW-001657 and granting rates as filed to become effective March 1, 2001.