Agenda Date:                   June 28, 2000
Item Number:
Docket:                    UW-000833
Company Name:           Harbor Hills Water Company 
Staff:                              Jim Ward, Revenue Requirements Specialist
                             Penny Hansen, Public Involvement Coordinator
Recommendation: 
Allow the tariff revisions as filed by Harbor Hills Water Company, in Docket 
UW-000833, to become effective July1, 2000, and issue an order requiring 
quarterly reports of capital improvement surcharge accounts.
Discussion: 
On May 30, 2000, Harbor Hills Water Company, (Harbor Hills) filed for general 
rates in the amount of approximately $29,376 (32%) of additional revenue per 
year. Harbor Hills serves approximately 185 active domestic and 280 
ready-to-serve customers north of Freeland, in Island County.
Harbor Hills is seeking this rate change to cover the costs needed to operate 
and maintain the water system. These costs include recently completed capital 
projects. Expenditures to upgrade and replace infrastructure and meet state 
regulatory requirements have prompted filing for a capital improvement 
surcharge. Additionally, the company will be implementing a ready-to-serve 
charge to customers reserving capacity on the water system.
The Commission has received seven letters opposed. Customers believe the 
proposal is too high and zero allowance unfair to large users . The Commission 
opened five consumer complaints. These complaints pertained to interruptions of 
service without notice to the customers and the odor and poor taste of the 
water. Commission staff investigated these complaints and found the company 
experienced many unscheduled interruptions from outside sources. There was one 
scheduled interruption in which the company posted a sign at the main entrances 
of the development four days prior to the interruption of service. The water 
quality issues only pertains to high levels of iron and manganese in the water 
system. The company is currently working with Department of Health for approval 
to install the ozone water treatment. No other water quality issues were 
detected. All five complaints have been closed. 
The annual active residential customer impact of these rates would be $85.20 
($25.20 in rates and surcharge of $60.) The annual ready-to-serve customer 
impact would be $120.00 ($60 in basic rates and $60 in surcharge rates.) The 
current and proposed rates are provided below:
Monthly Rates                                              Current           
Proposed
Ready-to-serve                                               
N/A                   $ 5.00
3/4 Inch Customer                           
        Includes 12,000 gallons                          $ 25.00            N/A
         > 12,000 gallons (per 1,000 gallons)    $ .45            N/A
Monthly Rates                                             Current           
Proposed
3/4 Inch Customer         
        Zero Allowance                                      
N/A                   $ 20.00
         0 - 5,000 gallons (per 1,000 gallons)      N/A                   $ 1.50
         5,000 - 10,000 gallons (per 1,000 gallonsN/A                   $ 2.50
         >10,000 gallons (per 1,000 gallons)         N/A                   $ 
3.50
All rates are plus State Utility Tax
Facilities Charge                                              
$3,000                   $2,300
Capital Improvement Surcharge                     $ N/A                   $ 
5.00 *
* Applies to all customers both active and ready-to-serve.
Regulatory Services Staff has reviewed the company's books and information to 
support the filing. Staff has found the proposed rates to be appropriate. The 
general rates would be used for general operating categories. The capital 
improvement surcharge and company's current facilities charge (service 
connection) would generate approximately $60,200 of additional revenue per year 
for a project total of approximately $638,000. The charges collected would be 
used to repay loans from the State Revolving Fund (SRF) for new capital 
improvements needed to comply with state regulations. The SRF loan will run for 
a period of 20 years and could be paid off earlier if additional customers 
connect to the water system. These capital projects includes new pressure 
reducing valves, additional fire hydrants and water treatment at the source 
wells.
Staff recommends that the Commission allow the tariff revisions as filed by 
Harbor Hills Water Company, in Docket UW-000833 to become effective July 1, 
2000, and issue an order requiring quarterly reports of capital improvement 
surcharge accounts.