DOCKET UW-981359  Page 1
 BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION

WASHINGTON UTILITIES AND )
TRANSPORTATION COMMISSION, )
   )
  Complainant, ) DOCKET UW-981359
   )
 vs.  )
   ) COMPLAINT AND ORDER
Thomas Water Service, Inc., ) SUSPENDING TARIFF
   ) REVISIONS, AND INSTITUTING
  Respondent. ) INVESTIGATION 
 ) 

  On October 26, 1998, Thomas Water Service, Inc., (Thomas Water) filed tariff 
revisions with the Commission designated as:

   First Revision of Sheet No. 7
   Canceling
   Original Sheet No. 7,

   First Revision of Sheet No. 8
   Canceling
   Original Sheet No. 8,

   First Revision of Sheet No. 21
   Canceling
   Original Sheet No. 21 .

  Thomas Water serves approximately 78 customers near Arlington, in Snohomish 
County.  Thomas Water consists of two water systems named Meadow Ridge (64 
customers) and Meadowbrook (14 customers).

  Thomas Water has filed for (a) a general rate increase of $42,120 (346%); (b) 
a return check (NSF) charge; and (c) an increase in the reconnection charge.  
Thomas Water is filing for general rates due to increased cost of labor 
contracts and additional plant to serve Meadow Ridge.

  Current and proposed rates are shown below on a monthly basis:

   Current Proposed 
Flat Rate Service:        Rates  Rates  
       $ 13.00 $ 58.00

Returned Check Charge   $  N/A $ 20.00
Reconnection Charge   $    0  $ 45.00

The company will also be changing its billing cycle from bi-monthly to monthly 
in arrears.

  Customers were noticed by mail, October 26, 1998, of the tariff filing and 
general rate increase.  Customers also received a second notice of the increase 
and public meetings were held November 2 and 5, 1998.

Customer Meeting

  The company held public meetings on November 2, 1998, and on 
November 5, 1998, in Arlington to discuss the proposed filing with its 
customers. Commission staff attended the November 5, 1998, meeting.  
Approximately 30 people were in attendance from the Meadow Ridge water system.  
Thomas Water explained in detail the history of the company’s ownership, who 
the company is indebted to and why, as well as the company’s relationships to 
the development known as Ironwood Ranch.  The company further informed the 
customers that in addition to this proposed rate increase of $58, it will come 
back to the Commission again in July 1999 to file for another $58 a month 
proposed rate increase which it believes it can justify.  Finally, the 
customers were informed that Thomas Water is for sale, but at this time a 
purchase price has not been determined.  The customers stated concerns about 
the same issues as the company discussed, but especially about the level of 
rate increase.  They also expressed an interest in the possibility of 
purchasing the system.  In addition, a few customers stated that there were 
water quality problems, but it appears those problems are caused by secondary 
contaminants which are not considered health hazards.
 
  The Commission has received 15 letters and one petition with 39 signatures 
opposed.  Those opposed believe that the increase is outrageous and believe 
that the customers should not have to pay for the poor business management of 
the company. Customers believe that the development of Ironwood Ranch 
subdivision is the purpose for this increase.  Most customers believe that an 
increase is warranted, but, not at the levels currently proposed.  The 
Commission received one complaint concerning water quality which could not be 
substantiated.  The customer was notified and the complaint closed.

Company History

  Thomas Water came under Commission jurisdiction in 1991.  At that time, the 
company served more than 100 customers.  The company’s initial tariff was 
effective October 1, 1991, and included five water systems.  The initial flat 
rate service was established at $13.00 per month billed bi-monthly and remains 
at that level today.

  Since 1991, the company has reduced its number of water systems to two 
(Meadow Ridge and Meadowbrook).  The company attempted to change its flat rate 
service to $34.00 monthly with a one-time assessment of $19,500 in December 
1996.  This request for an increase and assessment was withdrawn after 
discussions with Commission staff.  The company petitioned for deregulation by 
this Commission in January of 1997, which was withdrawn April 1997.  A stock 
transfer of ownership occurred in June 1997, from Myron Thomas to Buckskin 
Ranch, Inc.  A change of managers occurred in January 1998 to the current 
manager who represents a major creditor of the water company.  Under new 
management the company now meets Department of Health (DOH) standards.

  The Meadow Ridge system originally started with five wells located in pasture 
land.  The wells had been determined to be out of compliance with DOH testing 
and three of the wells have been permanently abandoned.  Two wells remain today 
as backup sources to the new well located west of the Meadow Ridge subdivision.

  Thomas Water transferred the ability to withdraw water to the new well 
location and is now capable of supplying full system capacity (Meadow Ridge) 
with water meeting DOH quality standards.  A new well, pumphouse and 
transmission line have brought the water system into compliance with DOH 
standards.

  Meadowbrook water system has had minor problems with DOH testing and is also 
now in compliance with DOH standards.

  Both water systems are unmetered, provide standby storage, and provide fire 
flow with Meadow Ridge having five fire hydrants and Meadowbrook having two 
fire hydrants.

  Thomas Water has an approved comprehensive water system plan as required by 
DOH.  This water system plan cost approximately $64,350 and will be amortized 
over its useful life of six years and result in an annual expense of $10,725.

  The manager has retained the services (at $23.44 per customer per month) of 
Snohomish County PUD to perform operations and maintenance of the Meadow Ridge 
system and retained an independent operator (at $64.29 per customer per month) 
to perform operations and maintenance on the Meadowbrook system.

Ironwood Development

  Ironwood is a proposed 143 lot plat located west of Meadow Ridge.  Recently 
the un-used and active water rights of Meadow Ridge were transferred to the new 
location in the development of Ironwood.  The parent company of Thomas Water 
(Buckskin Ranch) and the major creditor of Thomas Water, paid for the drilling 
of four wells within the plat of Ironwood.  Well #1 was completed and solely 
piped to Meadow Ridge to replace the well capacities of the Meadow Ridge 
pasture wells.  With operational changes, new well #1, and modifications 
performed to the water system, Meadow Ridge now meets DOH standards.  The 
remaining three wells located in Ironwood are not completed and are incapable 
of supplying any water to any system at this time.  Staff has reviewed the cost 
for drilling these four wells and confirmed that only those costs associated 
with the completed well that supplies water to Meadow Ridge has been attributed 
to Meadow Ridge.

  It appearing that the filing herein would provide charges and rates for water 
service rendered by respondent and that the rights and interests of the public 
might be injuriously affected thereby, it is the decision of the Commission to 
enter upon public hearing or hearings concerning such charges and the 
reasonableness and justness thereof and to suspend the operation of the above 
filing pending such hearing or hearings and decision thereon.

    The Commission deems it necessary in order to carry out the duties imposed 
upon it by law to investigate the books, accounts, practices and activities of 
respondent, to make a valuation or appraisal of the property of respondent and 
to investigate and appraise various phases of the operation of respondent. 

O R D E R

  IT IS THEREFORE ORDERED:

  1. The operation of the above tariff filing, filed herein October 26, 1998, 
is hereby suspended.

  2. A hearing or hearings, on the Commission's own motion, shall be held at 
such times and places as may be required.

  3. No change or alteration shall be made in the tariff filing filed herein, 
during the period of suspension, unless authorized by the Commission.

  4. An investigation is hereby instituted by the Commission.

  5. Respondent shall pay the expenses reasonably attributable and allocable to 
such investigation to the extent the requirement for such payment may be in 
accordance with the provisions of chapter 80.20 RCW.           

           DATED at Olympia, Washington, and effective this 30th day of 
December, 1998.

   WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION



      RICHARD HEMSTAD, Commissioner



      WILLIAM R. GILLIS, Commissioner