BEFORE THE
WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
Washington Utilities and )
Transportation Commission, )
)
Complainant, )
) DOCKET NOS. UG-931405/
vs. ) 931442 (CONSOLIDATED)
)
Washington Natural Gas Company, )
)
Respondent. )
STIPULATION FOR SUBMISSION AND DECISION
Washington Natural Gas Company ("the Company"), Public Counsel, Commis-
sion Staff, Seattle Steam Company, Partnership for Equitable Rates for
Commer-
cial Customers, and Northwest Industrial Gas Users, which shall
collectively be
referred to herein as "the Parties", do hereby stipulate and agree as
follows:
Recitals
1. On November 19, 1993, the Company filed certain revisions to its WN
U-2 tariff. The revisions sought to increase the Company's annual revenues
by
$24,555,000. This filing was assigned Docket No. UG-931405 ("the Rate
Case").
2. On November 24, 1993, the Washington Utilities and Transportation
Commission ("the Commission") suspended the Company's tariff revisions in
the
Rate Case and ordered hearings thereon. The Commission further ordered an
investigation into the books, accounts, practices, and activities of the
Company, and a valuation and appraisal of the Company's property and opera-
tions.
3. On November 29, 1993, the Company filed an application for approval
of an affiliated arrangement with Mercer Insurance Company, Limited
("Mercer").
This filing was assigned Docket No. UG-931442 ("the Mercer Case").
4. On January 5, 1994, the Commission entered an Order of Consolidation
which consolidated the proceedings in Docket Nos. UG-931405 and UG-931442
for
hearing and disposition.
5. On January 11, 1994, the Commission held a prehearing conference in
the consolidated proceedings. On February 22 and 25, 1994, the Commission
received the direct evidence of the Company and cross-examination of that
evidence.
6. Commission Staff has completed its investigation of the Company in
the consolidated proceedings. On April 6, 1994, Commission Staff filed
testimony and exhibits in Docket No.
UG-931405 recommending that the Company's annual revenues be increased by
$19,036,000. Commission Staff filed testimony and exhibits in Docket No.
UG-
931442 recommending that the Commission approve the Company's affiliated
arrangement with Mercer.
7. On April 6, 1994, Public Counsel filed testimony and exhibits which
recommended that various expense adjustments be made. The adjustments were
independent of, and in addition to, the adjustments recommended by
Commission
Staff. Public Counsel did not file testimony or exhibits in Docket No. UG-
931442 regarding the Company's affiliated arrangement with Mercer.
8. On April 21, 1994, Commission Staff revised its testimony and
exhibits in Docket No. UG-931405, which resulted in a change to its revenue
recommendation from $19,036,000 to $19,150,000.
9. On April 27, 1994, the Company filed rebuttal testimony and exhibits
in Docket No. UG-931405. The Company reaffirmed its request for an annual
revenue increase of $24,555,000.
10. Other parties have intervened in the consolidated proceedings,
including Seattle Steam Company, Northwest Industrial Gas Users, and
Partner-
ship for Equitable Rates for Commercial Customers. None of these parties
filed
testimony and exhibits in either proceeding.
11. The parties have reviewed and evaluated their positions. The
parties believe that a settlement on the terms presented herein is
preferable
to a fully litigated resolution of the consolidated proceedings.
12. In consideration for the terms presented herein, the parties desire
to settle the consolidated proceedings. The parties submit the Rate Case
and
the Mercer Case for decision by the Commission on the basis of this
settlement.
Stipulation
1. The Rate Case is submitted to the Commission for decision based upon
a stipulated annual revenue increase in the amount of $19,000,000
("Stipulated
Increase"). The parties submit the Rate Case for decision based upon the
total
amount of the Stipulated Increase.
2. The Stipulated Increase shall be spread among the Company's rate
schedules on a uniform percentage of current margin basis, as more
specifically
described in the attached Exhibit "A" (which is incorporated into this
stipula-
tion by reference). The parties stipulate to the rate spread described
herein
and in Exhibit "A" for purposes of Docket No. UG-931405 only. Each party
reserves the right in any other proceeding to advocate different methods or
approaches for allocating any rate increases or decreases which may be pro-
posed.
3. The parties agree that the affiliated arrangement with Mercer should
be approved on the basis of the record in Docket No. UG-931442, and that
the
affiliated arrangement with Mercer satisfies the applicable standards which
govern Commission approval of such arrangements. The parties understand
that
approval of the affiliated arrangement does not bar any party from
contesting
any impact of the affiliated arrangement with Mercer on rates in future
rate
proceedings.
4. The Rate Case and the Mercer Case are submitted for Commission
consideration based on the record created through and including the
hearings
scheduled for May 23-27, 1994. The parties stipulate to admission of the
testimony and exhibits filed by Commission Staff, Public Counsel, and the
Company in rebuttal, and all parties agree to waive further
cross-examination.
Hearings for purposes of taking testimony from members of the public shall
proceed as scheduled or on an earlier schedule.
5. The parties agree to submit the Rate Case and the Mercer Case
directly for Commission consideration and decision, and specifically waive
any
right to a proposed Order, Findings of Fact, or Conclusions of Law from the
Administrative Law Judge.
6. The parties request the Commission to expedite its decision and the
issuance of its final order in the consolidated proceedings, so that the
Company may place into effect rates pursuant to such order not later than
June
10, 1994.
7. If this stipulation is accepted by the Commission, the Company agrees
that it shall not, prior to March 1, 1995, make a tariff filing for an
increase
in total revenues. The test year for any filing on or after March 1, 1995
shall be no earlier than the Company's fiscal year 1994 (October 1, 1993 -
September 30, 1994). This paragraph shall not apply to 1) tracking filings
caused by changes in the level of the Company's purchased gas and pipeline
cost; 2) filings which the Company is required to make by Commission order
or
as otherwise required by law or rule (including, without limitation, the
cost
of service/rate design filing which the Commission has ordered be made by
May
31, 1994); and 3) filings which the Company may make or will make through
March
1, 1995, involving line extensions, customer service, natural gas vehicles,
propane, special contracts for service, and demand side management (DSM)
services. Notwithstanding the provisions of this paragraph, the Company
may
file for increased revenues prior to March 1, 1995, but only if the Company
in
good faith asserts those conditions necessary for interim/emergency rate
relief
as adopted by the Commission. Operating results at or better than
indicated in
the attached Exhibit "B" (which is incorporated into this stipulation by
reference) would not cause the Company to file for interim/emergency rate
relief. The Company may, however, file for such relief if conditions
occur
which prevent the Company from financing with unsecured debt.
8. A royalty imputation shall be recorded prospectively on the Company's
books as follows: The total imputation during the Company's fiscal year
(October 1 - September 30) shall be calculated as the lesser of 1) 1.5% of
the
gross revenues of Washington Energy Services Company ("WESCO") over the
same
period, or 2) 15% of WESCO's annual pre-tax operating income prior to
consider-
ation of the royalty imputation; provided, however, that the imputed amount
as
so calculated shall be no less than $150,000. Notwithstanding the above,
if
the annual calculation generates an imputed amount greater than $240,000,
then
the amount imputed for purposes of this paragraph shall be $240,000. The
imputed amount shall be recorded monthly on the Company's books, beginning
the
first day of the next month after acceptance of this stipulation by the
Commission.
9. The parties agree that the royalty imputation described in Paragraph
8, above, is based on certain connections between, and conditions
regarding,
the Company and WESCO (including earnings through March 1994) that 1) are
articulated in the record in Docket No. UG-931405; and/or 2) exist as of
May
10, 1994; and 3) have not previously been allocated between the respective
companies for ratemaking purposes. Absent a substantial change in
circumstanc-
es, the parties agree that, in future proceedings, they will not contest
the
basis for, or the formula for determining, the royalty imputation as
described
in Paragraph 8. Notwithstanding the above, the parties may contest the
royalty
imputation in the future because of applicable statutory or regulatory
changes.
Unless expressly provided herein, the parties do not waive their right to
argue
that a royalty imputation is or is not appropriate, under circumstances
different from those articulated in Docket No. UG-931405.
10. The Company agrees that, beginning the first day of the next month
after acceptance of this stipulation by the Commission, dues and other
contri-
butions paid to Rotary Clubs, Kiwanis Clubs, and Chamber of Commerce
organiza-
tions shall be booked below-the-line and shall not be recoverable in rates
in
future general rate proceedings. Dues and other contributions paid to
Olympia
Master Builders, Seattle Master Builders, Snohomish Master Builders, and
the
Building Industry Association of Tacoma/Pierce County shall be considered
lobbying expenses in part, and shall be allocated 50% above-the-line and
50%
below-the-line to achieve a surrogate for an itemized allocation.
11. The Company agrees that expenses incurred for activities associated
with influencing state and federal legislation, including local functions
which
relate to such legislation, shall be considered lobbying expenses and shall
be
booked below-the-line. The costs subject to this paragraph shall include
labor
costs of all Company personnel who participate in these efforts. The
Company
commits to utilize enhancements to its payroll system which it expects to
have
in place by October 1, 1994, to track the labor costs subject to this para-
graph.
12. The agreement in Paragraph 11, above, shall not apply to expenses
and activities associated with 1) influencing federal, state, and local
governments and agencies on matters unrelated to federal and state
legislation;
or 2) influencing or participating in rule-makings or code review at any
level
of government. The parties agree that the issue of whether the
aforementioned
costs are recoverable in rates, may be presented to and decided by the
Commis-
sion in future general rate proceedings. The Company agrees to facilitate
the
review and consideration of this issue by tracking labor costs associated
with
these activities, through the use of the enhanced payroll system to be
imple-
mented by October 1, 1994. The Company understands it may be required to
produce evidence on the nature of the specific activities related to such
labor
costs. If, in a future general rate case, the Company uses a test year
which
overlaps the implementation date of the system, the parties agree that the
data
compiled by the system may be extrapolated as if the system had been in
place
throughout the entire test year.
13. The Company agrees to prepare a formal customer service policy
(tariff or rule), which will be submitted to the Commission within 120 days
from the date of acceptance by the Commission of this stipulation. The
parties
reserve the right to comment or take a position on the policy.
14. The Company agrees to file a revised Rule No. 6 (Service Extensions)
and a revised Rule No. 7 (Main Extensions) to the Company's tariff within
120
days from the date of acceptance by the Commission of this stipulation.
The
parties reserve the right to comment or take a position on either or both
of
the revised Rules.
15. The Company and Commission Staff agree to work together to develop
multiple weather station billing data for consideration by the parties in
future proceedings.
16. The parties agree that this stipulation represents a negotiated
settlement in the public interest with respect to the matters as agreed to
in
this stipulation for the sole purpose of settlement of the matters agreed
to in
this stipulation. Except as expressly provided in this stipulation, the
parties individually and collectively do not waive any right to assert any
position in this or any other proceeding before the Commission and agree
that
this stipulation and the Commission's acceptance thereof shall not be cited
by
any party as constituting an approval of, or precedent regarding, any
concept,
theory, method, principle or issue in this or any other proceeding before
the
Commission.
17. The parties request that, if the Commission wishes to modify any
matter agreed to in this stipulation, the Commission so notify the parties
in
writing of the modification. If all parties do not agree with the
modification
within three business days from receipt thereof, the matter shall be sent
back
for further proceedings and the record reopened for the purpose of
receiving
the direct testimony of Commission Staff and Public Counsel with
cross-examina-
tion thereon, and the rebuttal testimony of the Company with
cross-examination
thereon. If the record is reopened accordingly, no party shall be bound by
the
provisions of this stipulation.
18. This stipulation and the attached exhibits represent an integrated
agreement among the parties with respect to the settlement of the
consolidated
proceedings. There are no other agreements or understandings (written or
oral)
which modify any part of the settlement of the consolidated proceedings, as
expressed herein.
19. This stipulation may be executed in multiple counterparts and, if so
executed, shall have the same force and effect as if executed in one
document.
This stipulation may be filed with facsimile signatures, provided that
original
signatures are filed thereafter.
DATED: May 16, 1994 WASHINGTON NATURAL GAS COMPANY
By /s/ David S. Johnson
David S. Johnson
Attorney
DATED: May 16, 1994 PUBLIC COUNSEL
By /s/ Donald T. Trotter
Donald T. Trotter
Assistant Attorney General
DATED: May 18, 1994 COMMISSION STAFF
By /s/ Robert D. Cedarbaum
Robert D. Cedarbaum
Assistant Attorney General
DATED: May 16, 1994 SEATTLE STEAM COMPANY
By /s/ Frederick O. Frederickson
Frederick O. Frederickson
Attorney
DATED: May 16, 1994 NORTHWEST INDUSTRIAL GAS USERS
By /s/ Paula E. Pyron
Paula E. Pyron
Attorney
DATED: __________ PARTNERSHIP FOR EQUITABLE RATES
FOR COMMERCIAL CUSTOMERS
By _______________________________
Carol S. Arnold
Attorney