DOCKET TG-980572  Page 1
 

BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION


In the Matter of the Petition of ) DOCKET: TG-980572
Harold LeMay Enterprises, Inc., ) 
G-98, for a Deferred ) ORDER AUTHORIZING CARRIER
Accounting Mechanism ) TO INSTITUTE A DEFERRED    ) ACCOUNTING MECHANISM FOR
   ) RESIDENTIAL RECYCLING
  ) 


   On April 17, 1998, Harold LeMay Enterprises, Inc.,d/b/a Rural Garbage 
Service, G-98, filed for increased residential recycling rates in Docket 
TG-980572.  The company now proposes to institute a deferred accounting 
mechanism for residential recycling to become effective beginning June 1, 1998.

  In the past, recycle rates were the total costs of collection and processing 
less the estimated value of the commodities collected.  Under deferred 
accounting, the gross collection and processing rate will be separately stated 
and subject to normal docketing procedures whenever rate changes need to be 
made.  For the commodity value portion, however, at the beginning of the 
program, and each year thereafter, an estimate will be made of the future 
revenue received from sales of commodities using an average of the three most 
recent months sales price and tonnage per commodity.  This amount will then be 
converted to a per customer per month basis, using a three month average number 
of customers, to be shown as a credit offset (if the commodities have value) or 
debit ( if the company must pay to have them taken away) add-in to the gross 
collection rate for recycling service.  This credit/debit amount will be 
subject to annual review and adjustment based on the comparison of the amounts 
expected at the beginning of the period versus the amounts later actually 
realized.  Any difference will be reflected in the commodity adjustment for the 
next year.

  A simple example, using LeMay's proforma results of recycling and present 
customers explains the process: 

  Rates effective June 1, 1998:

  Projected Revenue 5/31/98 $18,000
  
  Number of customers  2,850

  Commodity adjustment per month (.53)
   ($18,000/12/2,850)



  Gross Recycle Rate:     $3.19
  less: Commodity credit (.53)
  Net amount billed to customer $2.66


  Actual Recycle Value
  (12 mo. ended 5/31/99) $24,000

  Projected Revenue 5/31/98 $18,000

  Due Customers  $ 6,000



  Year June 1,1999 to May 31, 2000
  
  Projected Revenue   $16,000
  Number of customers   3,000


Calculation of rate to be in effect until May 31, 2000:

  Gross Recycle Charge $3.19

  Due customers for 1998-1999 (.17)
   ($6,000/12/3,000)

  Commodity Adjustment 6/1/99 to 5/31/00 (.44)
   ($16,000/12/3,000)

  Net Amount Billed Customers $2.58



FINDINGS

  The Commission finds that implementation of the proposed deferred accounting 
mechanism is a fair, just, and reasonable approach of setting rates that 
equitably balances the interests of solid waste providers and their customers 
against the risks of changing commodity values.  The Commission hereby approves 
Harold LeMay Enterprise's proposal to initiate a deferred accounting 
methodology to update the commodity credit portion of its overall residential 
recycling rate on a recurring basis.
O R D E R

  THE COMMISSION THEREFORE ORDERS That, Harold LeMay Enterprises, enter into a 
deferred commodity adjustment methodology for its residential curbside program 
in its proposed Tariff 12-1.  This new tariff must bear an expiration date of
August 31, 1999.

  DATED at Olympia, Washington, and effective this 27th day of May, 1998.

  WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION




          ANNE LEVINSON, Chair




         RICHARD HEMSTAD, Commissioner




   
    WILLIAM R. GILLIS, Commissioner