Agenda Date: February 23, 2000 Item Numbers: Dockets: UW-000126, UW-991863 Company Name: Harbor Springs Water Company, Inc. Staff: Danny Kermode, Revenue Requirements Specialist Penny Hansen, Public Involvement Coordinator Recommendations: • Dismiss Complaint and Order Suspending the tariff revisions in Docket UW-991863. • Grant the tariff revisions in Docket UW-000126 to become effective with Less Than Statutory Notice treatment on March 1, 2000. Discussion: On November 30, 1999, Harbor Springs Water Company, Inc., (Company) filed for a general rate increase in Docket UW-991863 which would have increased annual revenues by $38,900 or 108%. On December 29, 1999, the Commission issued a Complaint and Order suspending the tariff revisions. On February 1, 2000, Harbor Springs Water Company, Inc., filed a request to withdraw its filing dated November 30, 1999, (UW-991863). Simultaneously, the Company filed revised rates (UW-000126) which proposes to increase annual revenues by $19,650 or 54.8% and requested Less Than Statutory Notice (LSN) treatment to allow the newly filed rates to become effective at the beginning of the next monthly billing cycle (March 1, 2000). The Company has not had a rate increase since 1991 which was prior to first filing initial tariffs with the Commission in May of 1994. Harbor Springs serves approximately 103 residential customers in Pierce County near the city of Gig Harbor. The Commission has received 43 letters and one petition with 79 signatures opposed to the proposal. Customers believe the proposal is exorbitant, however, they recognize that a small increase may be warranted. Some low usage customers believe that it is not fair that they are paying the same amount for water as those customers in large homes with big yards and numerous inhabitants. Some customers with meters also stated that they are still charged the flat rate regardless of their usage. Customers believe the company should look for ways to cut expenses. The Company is requesting the increase to recover its increased expenses related to operating and maintaining the water system such as increased testing costs. In addition, costs associated with the Company’s increased investment in water plant installed over the last few years need to be recovered through increased rates. The Company has invested almost $70,000 in additional utility plant since its last rate adjustment in 1991. In its analysis, Staff removed costs related to the non-business use of the owner’s personal vehicle along with removing excess depreciation expense not related to providing water service. Legal and accounting costs were reduced to reflect actual expenses for the period. A cost not included in the Company's original filing was a $6.00 per customer (100%) increase in the monthly management fee charged by its Satellite Management Agency (SMA). Had the Company included the increased fee in its proposed rate, as Staff did, the requested rate increase would have been a 129% increase over current rates instead of the proposed 108% increase. The current, withdrawn, and revised rates are provided below: Monthly Rates: Current Withdrawn Revised Flat Rate Service $ 29.00 $ 60.40 $ 44.85 Percent increase 108.4% 54.8% Staff reviewed the accounting books and records of Harbor Springs for the test period ended September 30, 1999, and determined that the Company's initial proposed rates were excessive. The Company has filed revised rates which will produce $19,650 (54.8% increase) in additional revenue, in contrast to the $38,900 originally requested by the Company. Staff has determined that the revised rates are fair, just, reasonable, and sufficient. The results of Staff's investigation are shown on Attachment 1. Therefore, Staff recommends that the Commission dismiss the Complaint and Order Suspending the Tariff Revisions in Docket UW-991863 and grant the tariff revisions in Docket UW-000126 to become effective with Less Than Statutory Notice treatment on March 1, 2000. Attachment