Agenda Date: May 10, 2000 Item Number: Docket: UW-991634 Rulemaking for Investor Owned Water Companies - Submetering Staff: Danny Kermode, Revenue Requirements Specialist Gene Eckhardt, Assistant Director Water and Transportation Layne Demas, Revenue Requirements Specialist Penny Hansen, Public Involvement Coordinator Diana Otto, Consumer Program Specialist Mary Tennyson, Sr. Assistant Attorney General Dennis Moss, Review Judge Jennifer Watsek, Rules Coordinator Recommendation : Direct the Secretary to file a Notice of Proposed Rulemaking (CR-102) in Docket UW-991634 with the Office of the Code Reviser to revise Chapter 480-110 WAC, Water Companies. Background/Process: On February 13, 1998, the Commission filed a preproposal statement of inquiry (CR-101) with the office of the Code Reviser to initiate a review of the rules governing water companies in Chapter 480-110 of the Washington Administrative Code (WAC). That review was in compliance with the Governor's Executive Order 97-02 which requires agencies to review their rules for clarity, intent and statutory authority, need, effectiveness and efficiency, coordination, cost and fairness. A form of this rule came before the Commission on July 28, 1999, along with other revisions to WAC 480-110. At that open meeting the Commission adopted all revised rules submitted to them, except this rule in its original form. Instead at the July 28, 1999, Open Meeting the Commission directed Staff to file a Notice of Proposed Rulemaking (CR-102) related to the practice of landlords that bill their tenants for water usage, either directly or through a third party. Prior to Staff proceeding with the submission of the CR-102, questions were raised as to the authority of the Commission to assert jurisdiction beyond a master meter which serves a tenant-occupied building. In other words, does the Commission have the authority to assert jurisdiction over apartment owners or other landlords that rebill water usage past a master meter? The Commission's Executive Secretary requested an informal legal opinion from the Attorney General's office assigned to the Commission. A Senior Assistant Attorney General provided the opinion that the Commission does not have the authority to bring such entities under its jurisdiction for purposes of regulation. This rulemaking is based on the informal opinion. The proposed rule clearly states that the Commission does not regulate water charges assessed by a landlord to its tenants if water is provided as a part of the landlords' business of renting or leasing. Water Staff would still have investigative power to look into the factual situation to confirm that the landlord is not providing water service to the general public. The rulemaking process has consisted of soliciting written comments from interested persons, discussions with interested persons and discussions with other state commissions addressing the same issue including Texas, Nevada, and California. Copies of all meeting notices mailed by the Commission, written comments and all materials upon which staff has relied in this rulemaking process are included in the rulemaking file, which is located in the Commission's Records Management Section. There are no workshops anticipated since the rule merely clarifies the extent of the Commission's jurisdiction as defined by statute and common law. Therefore workshops would serve no meaningful purpose. Staff recommends written comments on this Notice of Proposed Rulemaking be submitted to the Commission Secretary by June 14, 2000. Comments received in response to the previous CR-102 were considered during the drafting of this proposed rule. Staff proposes to add this as an additional subsection to Chapter 480-110-255 WAC. The proposed rule is based on the advice of an assistant attorney general that apartment buildings, mobile home parks, and other entities with tenant relationships do not dedicate or devote facilities to public use, and do not hold themselves out to supply water service to the public, but instead serve a limited class of persons that they select as tenants. The Commission does not have the legal authority to assert jurisdiction. This rule is unique in that it does not impose requirements, but merely clarifies the scope of the Commission's jurisdictional authority. Staff recommends that the Secretary be directed to file a Notice of Proposed Rulemaking (CR-102) in Docket UW-991634 with the Office of the Code Reviser, to revise chapter 480-110 WAC - Water Companies. Attachment - Draft of Rule WAC 480-110-255 Jurisdiction (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 hundred twenty-nine 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.