BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION

In the Matter of the Application of )
South Sound Utility Company, Inc., and )
Washington Water Services Company, Inc., ) DOCKET UW-991500
for an Order Authorizing the  )
Merger of Property  by ) ORDER GRANTING 
Stock Acquisition.  ) APPLICATION
   )
................................................................................
. )


MEMORANDUM

  On September 30, 1999, South Sound Utility Company, Inc., (South Sound 
Utility) and Washington Water Service Company, Inc., (Washington Water Service) 
filed an application pursuant to the provisions of chapter 80.12 RCW for a 
merger of property by stock acquisition of South Sound Utility Company, Inc.  
South Sound Utility is located in Olympia and serves approximately 2,600 
customers in Thurston County.  

  Washington Water Service is a Washington corporation formed to act as a 
utility holding company.  Washington Water Service is a wholly owned subsidiary 
of California Water Service Group located in San Jose, California.  California 
Water Service Group currently owns 21 operating districts serving more than 
400,000 customers in California and has operations in Washington with 
approximately 9,000 customers. 

  The customers of South Sound Utility were notified of this proposed merger of 
property by stock acquisition of South Sound Utility.  In addition to the 
regulated water service operations, South Sound Utility also conducts 
non-regulated businesses including satellite management of water systems and 
general contractor services in the utility industry.  Washington Water Service 
will acquire all operations and property of South Sound Utility by exchanging 
$1,400,000 of its common stock for all outstanding stock of South Sound Utility 
and assumption of outstanding debt valued at approximately $1,100,000.

  The benefits of this merger include expanded financial resources, in house 
engineering, and water quality staff to provide all aspects of water system 
repair and operations. Washington Water Service will continue to operate South 
Sound Utility locally in Olympia. Washington Water Service anticipates 
centralizing some services at a later date to help economize operations.

  South Sound Utility rates will not change as a result of this merger and any 
future rate changes will be reviewed by this Commission.

  This Commission neither approves nor disapproves the reasonableness of any 
fees, charges, rates, or accounting allocations involved with the proposed 
arrangement and reserves the right to review those fees, charges, rates, or 
accounting allocations in a future rate proceeding.

FINDINGS AND CONCLUSIONS

  1. South Sound Utility Company, Inc., and Washington Water Services, Inc., 
are Washington businesses operated as public service companies subject to the 
jurisdiction of this Commission under the provisions of chapter 80.12 RCW.

  2. As to form, the application herein, meets the requirements of chapter 
80.12 RCW and the rules and regulations of the Commission adopted pursuant 
thereto.

  3. It appears, upon investigation, that the application for merger of 
property by stock acquisition is reasonable and consistent with the public 
interest and should therefore be approved.

O R D E R

  THE COMMISSION ORDERS:

  1. Subject to the conditions of this order, South Sound Utility Company, 
Inc., is hereby authorized to merge by stock acquisition with Washington Water 
Services, Inc., pursuant to the application of merger of property by stock 
acquisition filed with the Commission September 30, 1999.

  2. No material change, revision, or amendment to the application and 
agreement shall become effective without the Commission's prior written 
approval.

  3. Washington Water Services, Inc., shall file with the Commission within 60 
days after this effective date of this order, for its prior written approval, 
the journal entries by which they propose to record on their books the merger 
of property by stock acquisition authorized herein.

  4. The reasonableness of any fees, charges, rates, or accounting allocations 
involved in carrying out the provisions of ordering paragraph no. 1 of this 
order are neither approved nor disapproved in this proceeding.


  5. This order shall in no way affect the authority of this Commission over 
rates, services, accounts, evaluations, estimates, or determination of cost or 
any matters whatsoever that may come before it, nor shall anything herein be 
construed as an acquiescence in any estimate or determination of cost or any 
valuation of property claimed or asserted.

  DATED at Olympia, Washington, and effective this 27th day of October, 1999.

  WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION




      CAROLE J. WASHBURN
      Secretary