ORDER NO. 95-1055 

ENTERED OCT 2, 1995

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UP 123

DISPOSITION: APPLICATION APPROVED

On August 18, 1995, Clayton Creek Water Association (CCWA) filed an application pursuant to ORS 757.480 and OAR 860-27-025 requesting approval to purchase the Clayton Creek Water Service, also referred to as the Clayton Creek Well and Distribution Service, (CCWS) from Sharlands Investment Corporation (SIC).

At its September 26, 1995, public meeting, the Commission adopted staff’s recommendation to approve the sale.

Based on the application and the Commission's records, the Commission makes the following:

FINDINGS OF FACT

Clayton Creek Water Service (CCWS), an investor-owned water utility, is owned by SIC, a California corporation. The water system currently provides service to a 59 lot subdivision in rural Ashland, Oregon. The current rate structure is $11 base rate for the first 5,000 gallons and $.80 per 1,000 gallons over the base usage.

Clayton Creek Water Association (CCWA) is a newly formed association consisting of the subdivision’s home owners and was formed for the purpose of purchasing and managing CCWS. Association members are concerned about the continued management and protection of their water service.

CCWA’s commitment to its members is that the cost of forming the association and purchasing the system will not exceed $225 per lot. However, CCWA plans to raise the water rates in the near future to provide for a capital reserve fund. The amount of the rate increase will be based on a projected capital improvement plan CCWA intends to prepare. CCWA states that the home owners have been informed and support the idea of raising rates to provide for a capital reserve fund. Upon receiving Commission approval of this sale, the water company ceases to be an investor-owned company subject to PUC authority. Therefore, the issue of whether a capital reserve fund would be allowed is a moot point.

Although CCWA lacks experience in managing a water utility, it intends to become a member of the Oregon Association of Water Utilities (OAWU). The OAWU is a federally funded organization that provides technical assistance, training, on-site field assistance, information and representation in the legislative process to the rural water systems throughout Oregon. CCWA plans to use the resources available from the OAWU.

It is difficult for SIC to administer the affairs of the water system from San Francisco. SIC has periodically offered to sell the system which consists of four wells, a pump house, two concrete water storage tanks, land, pumps, and distribution piping. Actual consideration for this transaction is $12,000. Financing will be provided by two CCWA members. Terms of the Promissory Note include $2,000 down and the balance to be paid in semi-annual payments of not less than $2,000 at 5 percent interest on the unpaid balance.

OPINION

Applicable Law

ORS 757.005(1)(a)(A) defines a public utility as, among other things, an entity that owns, operates, manages, or controls all or part of any plant or equipment in this state for the production, transmission, delivery, or furnishing of water, directly or indirectly, to or for the public. Water utilities serving fewer than 300 customers at an average rate of $18 or less per month are excluded from this definition. A water utility otherwise exempt from regulation becomes subject to the Commission’s jurisdiction when it abandons or sells its business.

ORS 757.480 requires a utility proposing to sell, lease, assign, or otherwise dispose of property necessary or useful to the performance of its duties to obtain approval from the Commission.

OAR 860-27-025 specifies the information a public utility must submit when it makes application to sell or lease its property. CCWA’s application is acceptable.

CONCLUSIONS

1. CCWA’s proposed transaction meets the requirements of ORS 757.480.

 

2 The application should be granted.

 

ORDER

IT IS ORDERED that the application of the Clayton Creek Water Association to purchase the Clayton Creek Water Service, also referred to as the Clayton Creek Well and Distribution System, from Sharlands Investment Corporation is granted.

Made, entered, and effective ________________________. 

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days

of the date of service of this order. The request must comply with the requirements of OAR 

860-14-095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-13-070. A party may appeal this order to a court pursuant to ORS 756.580.