Agenda Date:  September 29, 1999
Item Number:  

Docket:   UW-991329
Company Names:  Harbor Water Co., Inc., and
    Washington Water Service Company, Inc.

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

Recommendation:

Approve the application by Harbor Water Co., Inc., and Washington Water Service 
Company, Inc., for a merger of property by stock acquisition of Harbor Water 
Co., Inc., in Docket UW-991329  effective October 1, 1999.

Discussion:

On August 24, 1999, Harbor Water Co., Inc., (Harbor Water) 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 Harbor Water Co., Inc.  Harbor Water is located in Gig Harbor 
and serves approximately 9,000 customers in Pierce, Kitsap and Mason 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 over 400,000 
customers in California and will start operations in Washington with this 
merger.

The customers of Harbor Water were notified of this proposed merger of property 
by stock acquisition of Harbor Water.  In addition to the regulated water 
service operations, Harbor Water 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 Harbor Water by exchanging $7,100,000 of its common stock for 
all outstanding stock of Harbor Water and assumption of outstanding debt valued 
at approximately $1,900,000.

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

Harbor Water rates will not change as a result of this merger and any future 
rate changes will be reviewed by this Commission

Staff recommends that the Commission approve the application by Harbor Water 
Co., Inc., and Washington Water Service Company, Inc., for a merger of property 
by stock acquisition of Harbor Water Co., Inc., in Docket UW-991329 effective 
October 1, 1999.