Agenda Date: April 28, 1999
Item Number:

Docket:   UW-990519
   
Company Name: American Water Resources, Inc.

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

Permit Tariff Revisions in Docket UW-990519 filed March 31, 1999, to become 
effective May 1, 1999.

Discussion:

On March 31, 1999, American Water Resources, Inc., (American Water) filed for a 
general rate increase of $11,811 (2%) annually, in the form of surcharges.  
American Water serves approximately 1,873 active customers in six counties. 
The company is requesting the rate increase to cover the costs of emergency 
generators for those systems that the majority of voting customers, by survey 
responses, requested.  American Water will install the generators.  The 
customers of Tolmie Estates, Pit Water, and Nisqually Highlands voted by simple 
majority to self-charge a surcharge for emergency generators.  These emergency 
generators will be used by these water systems only during local power 
outages.  Surcharge collections will be used for a bank loan repayment.

The annual customers’ revenue impact of this filing will be approximately 
$63.96 for Tolmie Estates, $161.04 for Pit Water, and $97.68 for Nisqually 
Highlands.  The surcharges are to apply to only the three listed water 
systems.  Surcharges are to expire May 1, 2004, or upon recovery of the loan 
principle ($44,000), plus interest and taxes, whichever comes first.

The Commission received one letter opposed to installation of a generator in 
the Nisqually Highlands sub-division.  The customer believes that people 
thought the questions from the company were just a survey (not mandatory to 
respond) and believes that if customers understood that the results would be 
the basis for justifying a capital project and an additional surcharge of $8.13 
a month, the customers would have responded to the survey.   American Water has 
sent notice to the affected three systems of the request for a surcharge on 
those water systems.

Monthly Rate Schedule    Current Proposed

Tolmie Estates Generator Surcharge    --  $ 15.33
Pit Water Generator Surcharge     --  $ 13.42
Nisqually Highlands Generator Surcharge     --  $   8.14

The funds received as a result of the customer survey results for emergency 
generators surcharges will be deposited into a separate reserve account 
exclu-sively for the purpose of making electrical emergency power improvements 
identified as part of the company's capital improvements requested by 
customers. This separate reserve account shall be listed on all company 
financial records and shall be considered a cash account asset (NARUC account 
#127).  Expenditures from the reserve account shall be treated as customer 
contri-butions for ratemaking purposes.  American Water has agreed to provide 
quarterly reports as shown in attachments.

An accounting investigation of the surcharge information has been completed.  
The company has demonstrated the rates filed in Docket UW-990519 to be fair, 
just, reasonable, and sufficient.  

Staff recommends the Commission permit the tariff revisions in Docket 
UW-990519, to become effective May 1, 1999.

Attachment