State regulators reject proposed Cascadia Water revenue increase

Media contact: [email protected]or 360-664-1116
Docket number: UW-240151

LACEY, Wash. - On Sept. 30, the Utilities and Transportation Commission issued an order rejecting a proposed rate increase by Cascadia Water, LLC (Cascadia Water) that would have raised its revenue by $1.7 million or 75%. This decision came after a thorough review process, which included multiple rounds of testimony, two hearings over three days, hundreds of public comments, and extensive legal discussion.

The commission has instructed Cascadia Water to submit new proposals that should lead to a revenue increase of $1.168 million or 49.1%. Some key financial points in the decision include:

• A return on investment rate of 10.18%.
• A cost of debt of 6.04%.
• A balanced mix of debt and equity (50:50).
• A total return rate of 8.11%.

The commission found that several of Cascadia Water's planned projects were not prudent because the company did not provide sufficient documentation or keep its management adequately informed. Specific projects, as well as a meter replacement initiative, were considered imprudent. As a result, the approved rates authorized a reduced return to these projects, based on the approved weighted cost of debt rather than the high cost of equity.

The commission confirmed its earlier findings regarding several other projects and decided not to revisit those issues. Other important conclusions include:

• A proposal to merge the Island and Peninsula water systems' rates and tariffs was rejected.
• The removal of the Aquarius surchargewas denied.
• Some expenses, like insurance premiums and office costs, will be allowed for recovery.
• However, certain staff pay and travel expenses were disallowed.

Cascadia Water must now make the necessary adjustments to comply with the terms of the settlement, including updating all the required documents to reflect these changes.

About the UTC

The UTC regulates the rates and services of investor-owned electric utilities, telecommunications companies, natural gas and water companies, solid waste collection companies, household-goods movers and passenger transportation companies, commercial ferries, pipeline companies, marine pilotage, and a low-level radioactive waste repository. The commission does not regulate the rates of broadband services, cellular, cable, or Internet service.

About Cascadia Water

Cascadia Water, LLC was formed in 2018 and is a wholly-owned subsidiary of NW Natural Water Company, LLC. They provide water service for nearly 4,000 connections, primarily in Western Washington.

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