Contact:
PO Box 40128
Olympia, WA 98504-0128
E-mail
The Utilities and Transportation Division is one of the smaller divisions in the AGO. One division chief, six Assistant Attorneys General, one Legal Secretary 3, one Legal Secretary 2/25% Paralegal, and one Legal Secretary 1 provide legal services to the Washington Utilities and Transportation Commission (UTC or Commission). The UTC regulates the rates and practices for a wide range of services, including: telecommunications (but not wireless, Internet, or cable companies), electricity and natural gas, solid waste collection, water, pipelines, railroad carriers and facilities, in-state household movers, private ferries, and bus companies. New market conditions, technology, federal and state laws, and consumer expectations make for an ever-changing policy and legal landscape.
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The division principally handles regulatory litigation. The division represents the Commission in court, both in appeals from its decisions and in original actions, as well as proceedings before various federal agencies, including the Federal Energy Regulatory Commission (FERC) and the Federal Communications Commission (FCC), and administrative entities, such as the Bonneville Power Administration (BPA). The division represents Commission Staff in rate proceedings and other regulatory actions before the Commission. In addition, the division assists in the disposition of more than 2000 formal filings considered annually by the Commission.
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Currently, the division is handling nine cases in state and federal courts and five formal federal administrative agency cases (not including participation in rulemaking proceedings before the FCC and FERC). In addition, the division is handling a large number of administrative cases before the UTC, ranging from complex rate and pricing proceedings to smaller cases impacting only a few consumers. The vast majority of matters before the Commission are resolved without formal adjudication. These are either non-controversial or resolved through negotiation or other alternative dispute resolution processes. Many matters are resolved at the Commission's regularly scheduled open public meetings.
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Recent Rate Cases
There are two major rate cases pending before the UTC. Puget Sound Energy (PSE) filed a power-cost only rate case (PCORC) for a 3.7 percent increase in electric rates. Avista Utilities recently filed a general rate request, seeking a 16 percent, or $51 million, increase for its electric rates and three percent, or $4 million, for natural gas.
PacifiCorp: In June 2007, the Commission approved a 6.5 percent, or $14 million, increase in electric revenues as well as allocated $418,000 for low-income energy assistance. In addition, the Commission disallowed recovery of $3.4 million for severance packages for executives who left after MidAmerican Holding Company’s purchase of PacifiCorp from Scottish Power last year. Also, the Commission accepted the company’s formula to resolve the long-standing dispute on how to allocate costs in its six-state territory. The formula will be tested during a five-year trial period, and then reviewed by an oversight committee. In 2006, PacifiCorp filed a request to increase its base rates in Washington by $23.2 million in order to earn a 10.2 percent return on equity (ROE), which was authorized by the Commission in the 2005 rate case.
Cascade: The Commission approved an overall rate increase of 2.7 percent, and issued its Final Order Accepting Settlement, Subject to Conditions, in January 2007. The agreement reached between Cascade and other parties allows Cascade to collect additional revenues of $7 million and raise certain customer service charges. Cascade Natural Gas Corporation sought to increase its natural gas revenues by $11.7 million or 4.47 percent.
PSE 2006 General Rates: In January 2007, the Commission issued its order rejecting tariff sheets and authorizing and requiring compliance filings. In addition, the Commission authorized PSE to file tariff sheets that will result in increases of about 1.0 percent for electric and 3.2 percent for natural gas rates, and approved an incentive-based program to promote electric conservation and increase funding for low-income assistance programs. PSE’s original filing sought a $148.8 million, or 9.21 percent, electric revenue increase and a $51.3 million, or 5.34 percent, natural gas revenue increase.
Energy
PSE: The Commission issued a $900,000 penalty against PSE for its violation of consumer privacy laws by intentionally sharing customers’ private information with an outside marketing partner without customers’ written permission, with an additional $95,000 allocated to low-income housing assistance. In addition, PSE is required to permanently dissolve the marketing program—known as PSE Connections, which marketed customers’ household services—that violated state law as well as notify customers of its misconduct and penalties, which may not be recovered in any future rate case.
Avista: In April 2006, the company filed a petition requesting authority to implement a natural gas decouple mechanism in order to separate business operations rates and commodity sales rates. The Commission issued its final order approving the Decoupling Pilot Program in February 2007.
Also, Avista applied for an order approving the company’s corporate reorganization to create a holding company, AVA Formation Corp., for the company’s utility operations in Washington. If approved, Avista Utilities would become a separate company under the new holding company; Avista Corporation would no longer exist as an operating entity; Avista Capital, Inc. would remain a business entity and would be owned by the new holding company. Parties reached a settlement in January 2007.
Cascade: One of the parties in the company’s rate case, Cost Management Services, Inc. (CMS), filed a complaint against Cascade, alleging that the company is violating state and federal law by selling natural gas at retail prices to customers who take transportation-only service. Though related, the matter was not consolidated with the rate case. Cascade and CMS filed motions for summary judgment, and in January the Commission issued its order granting in part and denying in part the motions.
In June 2007, the Commission approved the $470 million sale in the MDU Resources Group (MDU) acquisition merger of Cascade Natural Gas Corporation. The sale is contingent upon conditions in the multi-party settlement, which ensures that the sale will not result in harm to ratepayers or the broader public interest. Cascade is bound by 39 comprehensive commitments to protect the public interest. In addition, ratepayers will share rate credits of $672,000 per year from November 2008 through December 2012. In 2006, MDU entered into a merger agreement to acquire Cascade for approximately $475 million, or a cash consideration of $26.50 per share. The merger required approval from the Commission as well as the Oregon Public Utilities Commission, Cascade’s shareholders, clearance under the Hart-Scott-Rodino Act, and the various jurisdictions in which MDU’s utility divisions operate.
Telecommunications
Qwest: In July 2006, Qwest Corporation filed a lawsuit against the Commission, the Chairman and the Commissioners (in their official capacities as commissioners) and two telecommunications companies in U.S. District Court, Western District at Seattle. In its complaint, Qwest alleged that the Commission unlawfully expanded the scope of the ISP Remand Order to encompass long-distance calls that are covered by a separate access charge regime, FCC rules and the Telecommunications Act of 1996. In addition, Qwest alleged that the Commission unlawfully granted relief to the companies—Level 3 Communications and Pac-West Telecomm—when it ordered Qwest to pay the companies intercarrier compensation on all calls placed to ISPs. The Commission asserted that Qwest was seeking the right to avoid paying compensation for “long distance” ISP-bound traffic, regardless that it agreed to incorporate into the interconnection agreements the FCC’s definition of “ISP-bound traffic,” which makes no distinctions between local and long-distance traffic. In April 2007, the court ordered that the Commission’s final decisions be reversed and remanded, and determined that the decisions violated the FCC’s ISP Remand Order by interpreting the Order to include VNXX calls terminating outside a local calling area.
Also, Qwest filed a complaint with the Commission against nine telecommunications companies—competitive local exchange carriers (CLECs)—requesting a finding from the Commission that these competitive carriers are unlawfully avoiding originating and terminating access charges for dial-up Internet calls. Qwest alleges that the CLECs’ use of virtual NXX or VNXX numbering arrangement violated its access tariffs, prescribed exchange areas and state law, and is contrary to public policy.
In March 2006, Qwest filed an appeal in the state Court of Appeals, Division II, regarding Thurston County Superior Court’s decision to uphold the Commission’s Cash Transfer Reporting Rule (WAC 480-120-369) and Affiliated Interests and Subsidiary Reporting Rule (WAC 480-120-395), alleging that the Commission lacks the statutory authority to promulgate the rules and that the rules should be invalidated. Oral argument was heard in January 2007, and parties are awaiting the court’s decision.
In October 2006, Qwest filed a petition for an alternative form for regulation (AFOR) pursuant to RCW 80.36.135, seeking relief from tradition rate-of-return regulation with an AFOR that would change its regulatory environment to that of a CLEC. Parties are awaiting the Commission’s decision.
Inland: In Thurston County Superior Court, Inland Telephone Company filed its appeal of the Commission’s order rejecting the company’s tariff revision, alleging that the Commission’s final order violates constitutional provisions by requiring Inland to provide service to an area that it cannot physically serve. (Inland had previously requested an access easement from the Suncadia Resort, which was denied.) The company’s proposed tariff would have removed the Roslyn Exchange, now occupied by the Suncadia Resort, from its service area as well as added area north of the Exchange. The Commission denied both requests, stating that Inland did not adequately support its proposal and failed to file documentation supporting the proposed addition.
Transportation
Kennewick: The City of Kennewick filed its petition against the Union Pacific Railroad in June 2004 to establish a new at-grade highway/rail crossing. In 2005, the matter was consolidated with a similar matter that the City filed against the Port of Benton and the Tri-City and Olympia Railroad. The Commission issued its order denying the petition in January 2007, stating that the City’s evidence of public need for the crossing was weakened by close alternatives and by the City’s failure to analyze the impact of ongoing train-switching operations on motorists who would use the crossing.
Pipeline Safety
Talerico: The state filed a complaint and summons in Thurston County Superior Court against Talerico Construction Company regarding its violations of RCW 19.122 (one-call notification), over which the Commission has no enforcement authority. The Commission has alleged that the company—during 10 excavations ranging from December 2004 to May 2006—failed to notify PSE within the required timeframe and ultimately damaged PSE’s underground electric and gas facilities in multiple locations, then failed to notify PSE of the alleged damages.
Bradwood Landing: The Commission filed its Notice of Intervention in the Bradwood Landing and NorthernStar Energy matter before FERC, regarding the safety of a proposed natural gas pipeline along the Columbia River.
Water
Iliad: In April 2006, Iliad Water Service filed a request for a surcharge tariff to fund a water-chlorination facility for the Alder Lake Water System. The Commission issued its initial order in early January 2007, rejecting Iliad’s request to modify the tariff and denying the company’s motion to reopen the record. Iliad subsequently filed a petition for administrative review. The Commission’s interlocutory order was issued February 2007, rejecting the tariff revision and holding the docket open pending a staff investigation, with a staff report due May 1. In addition, the Commission accepted Iliad’s proposal to defer consideration of the surcharge tariff while the company tries to secure a subsidized-interest loan. In March 2007, Commission Staff filed a petition for interlocutory review and clarification of the Commission’s order. The Commission issued its order accepting interlocutory review in April 2007, and extended the deadline for staff’s investigation report to June 30.
Miscellaneous/Non-UTC
Public Records: Approximately 20 pipeline companies filed preliminary injunctions in Thurston County Superior Court against the Commission’s disclosure of GIS pipeline mapping data sought through public records requests filed by several newspapers and a member of the Citizens’ Committee on Pipeline Safety. The court ruled that the UTC must disclose the requested data. The companies filed for a stay of the trial court’s decision in the Court of Appeals, Division II. The Department of the Navy has filed a parallel suit in federal court.
Tobacco: In April 2006, the State filed a lawsuit in King County Superior Court against 29 tobacco companies, regarding diligent enforcement of the tobacco Master Settlement Agreement. Following other settling states’ lead, the defendants filed a Motion to Compel Arbitration, which was granted in September 2006, dismissing the State’s complaint. The state filed its Notice of Appeal with King County in October 2006, and the matter was received by the Court of Appeals, Division I in November 2006. In December 2006, the respondents filed a Motion for Summary Dismissal for Lack of Jurisdiction. Oral argument on that issue was held in January 2007. In February 2007, the court commissioner dismissed the state’s appeal. In March 2007, the state filed a Motion to Modify Ruling in response to the dismissal. Once the arbitrators have been chosen, the matter will proceed to arbitration.
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