Agenda Date:  May 30, 2001
Item Number:  2G

Docket:   UW-002051
Company Name: Tall Timber Water Systems, LLC

Staff:   Jim Ward, Revenue Requirements Specialist
Penny Hansen, Public Involvement Coordinator

Recommendation:

Dismiss the Complaint and Order Suspending the Tariff Revisions by Tall Timber 
Water Systems, LLC, in Docket UW-002051, and approve the revised surcharge and 
require reporting, effective June 1, 2001.

Discussion:

On December 22, 2000, Tall Timber Water Systems, LLC, (Company) filed for a 
rate increase of $4,468 (2 percent) of annual revenue.  This rate increase is 
in the form of a surcharge applied to one water system owned by the Company.  
Cedar Shores water system serves 36 connections and is located off of Steamboat 
Island Road, east of Olympia, in Thurston County.  The Company serves 
approximately 580 customers on 57 water systems, located in west Mason County, 
north Lewis County and south of Olympia, in Thurston County.

This filing is made to recover the cost of water treatment plant recently 
installed by the company.  The water treatment is for two secondary 
contaminants, iron and manganese.  The overall proposed cost for the 
improvements is approximately $45,808.

In the original filing, the Commission received several customer letters and 
Staff attended a public meeting with the customers on January 3, 2001.  
Customers were concerned with the quality of the water and the lack of 
information and maintenance done by the Company since being purchased in 1997.  
Customers believe the water treatment capital cost should be spread among all 
customers of the Company and not applied only to them.  Customers believe the 
company did not follow the procedures in its 1999 letter to the customers 
regarding treatment options.  The customers were also not aware that the 
company interpreted the survey performed last year to be a “vote” approving the 
company to purchase, install and recover the cost of water treatment.

Subsequent to the original filing in November of last year for a general 
company wide treatment surcharge, Commission Staff, Company and customers met 
several times and agreed on a ballot to determine the appropriateness of the 
treatment surcharge for Cedar Shores only.  This ballot was to allow customers 
the opportunity to vote for the treatment system cost recovery or to have the 
treatment system removed.  The Commission Staff mailed ballots to all 36 
customers.  Out of 36 customers the Commission received 20 returned ballots, 17 
ballots in favor of the surcharge of $13.25 and 3 customers opposed.  There 
have not been any further customer comments regarding this issue.  

Monthly Surcharge Rate   Current  Proposed Revised
Cedar Shores Capital Improvement    N/A  $ 10.95 $ 13.25


The revised surcharge would be collected from Cedar Shores customers only.  The 
Total cost for iron/manganese treatment is $45,808.  The monthly surcharge is 
based on current number of customers (36) and allows recovery over a 20-year 
period.  This monthly surcharge includes principal, interest and state tax.  
New connections would pay a catch-up payment (based on time from surcharge 
starting to connection) and the monthly surcharge.  New customer connections 
would reduce the life of the surcharge recovery period and the amount collected 
from each customer.  Surcharge will expire in 20 years or sooner if the 
principal is repaid.  A one-time payment of $1,273 may be made in the first 90 
days of the collection period to avoid interest cost.

Surcharge collection and administration are subject to the provisions of WAC 
480-110-455, water company funding mechanisms and specifically WAC 480-110-455 
(4), accounting and reporting requirements.

The Company has demonstrated that the revised surcharge is fair, just, and 
reasonable.  Therefore, Staff recommends that the Commission Dismiss the 
Complaint and Order Suspending the Tariff Revisions by Tall Timber Water 
Systems, LLC, in Docket UW-002051, and approve the revised surcharge and 
require reporting effective June 1, 2001.