LATE PAYMENT CHARGE

APPLICABILITY

TERRITORY

RATES

Late Charge: A late charge of $25.00 on unpaid balance subject to (I)
special conditions below.

SPECIAL CONDITIONS

1. The balance is unpaid and subject to a late charge if the bill is past-due, or delinquent, as defined in Rule 11, Section B.1.a.

2. The late charge should be imposed only once on a delinquent bill, and (C)
imposed after the first installment becomes delinquent January 19th in snow |
conditions. Since the account would be shut-off before a subsequent |
installment or bill and then subject to the reconnection fee as authorized by |
Tariff Rule No. 11. (C)

3. All bills are subject to the reimbursement fee as set forth on Schedule No. UF.

APPENDIX B

Agate Bay Water Company, Inc.

RULE N0. 14.1

WATER CONSERVATION AND RATIONING PLAN

GENERAL INFORMATION

If water supplies are projected to be insufficient to meet normal customer demand, and are beyond the control of the utility, the utility may elect to implement voluntary conservation using the portion of this plan set forth in Section A of this Rule after notifying the Commission's Water Division of its intent. If, in the opinion of the utility, more stringent water measures are required, the utility shall request Commission authorization to implement the mandatory conservation and rationing measures set forth in Section B.

The Commission shall authorize mandatory conservation and rationing by approving Schedule No. 14.1, Mandatory Water Conservation and Rationing. When Schedule No. 14.1 has expired, or is not in effect, mandatory conservation and rationing measures will not be in force. Schedule No. 14.1 will set forth water use violation fines, charges for removal of flow restrictors, and the period during which mandatory conservation and rationing measures will be in effect.

When Schedule No. 14.1 is in effect and the utility determines that water supplies are again sufficient to meet normal demands, and mandatory conservation and rationing measures are no longer necessary, the utility shall seek Commission approval to rescind Schedule No. 14.1 to discontinue rationing.

In the event of a water supply shortage requiring a voluntary or mandatory program, the utility shall make available to its customers water conservation kits as required by Rule 20. The utility shall notify all customers of the availability of conservation kits.

(continued)

APPENDIX B

Agate Bay Water Company, Inc.

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

A. CONSERVATION - NON-ESSENTIAL OR UNAUTHORIZED WATER USE

No customer shall use utility-supplied water for non-essential or unauthorized uses as defined below:

1. Use of water through any connection when the utility has notified the customer in writing to repair a broken or defective plumbing, sprinkler, watering or irrigation system and the customer has failed to make such repairs within 5 days after receipt of such notice.

2. Use of water which results in flooding or run-off in gutters, waterways, patios, driveway, or streets.

3. Use of water for washing aircraft, cars, buses, boats, trailers or other vehicles without a positive shut-off nozzle on the outlet end of the hose. Exceptions include washing vehicles at commercial or fleet vehicle washing facilities operated at fixed locations where equipment using water is properly maintained to avoid wasteful use.

4. Use of water through a hose for washing buildings, structures, sidewalks, walkways, driveways, patios, parking lots, tennis courts, or other hard-surfaced areas in a manner which results in excessive run-off or waste.

5. Use of water for watering streets with trucks, except for initial wash-down for construction purposes (if street sweeping is not feasible), or to protect the health and safety of the public.

6. Use of water for construction purposes, such as consolidation of backfill, dust control, or other uses unless no other source of water or other method can be used.

7. Use of water for more than minimal landscaping in connection with any new construction.

(continued)

APPENDIX B

Agate Bay Water Company, Inc.

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

A. CONSERVATION - NON-ESSENTIAL OR UNAUTHORIZED WATER USE (CONT.)

8. Use of water for outside plants, lawn, landscape, and turf areas more often than every other day, with even numbered addresses watering on even numbered days of the month and odd numbered addresses watering on the odd numbered days of the month, except that this provision shall not apply to commercial nurseries, golf courses and other water-dependent industries.

9. Use of water for watering outside plants, lawn, landscape and turf areas during certain hours if and when specified in Schedule No. 14.1 when the schedule is in effect.

10. Use of water for watering outside plants and turf areas using a hand-held hose without a positive shut-off valve.

11. Use of water for decorative fountains or the filling or topping off of decorative lakes or ponds. Exceptions are made for those decorative fountains, lakes, or ponds which utilize recycled water.

12. Use of water for the filling or refilling of swimming pools.

13. Service of water by any restaurant except upon the request of the patron.

B. RATIONING OF WATER USAGE

In the event the conservation measures required by Section A are insufficient to control the water shortage, the utility shall, upon Commission approval, imposed mandatory conservation and rationing. Rationing shall be in accordance with the conditions set forth in Schedule No. 14.1 as filed at the time such rationing is approved by the Commission.

Before mandatory conservation and rationing is authorized by the Commission, the utility shall hold public meetings and takes all other applicable steps required by Sections 350 through 358 of the California Water Code.

(continued)

APPENDIX B

Agate Bay Water Company, Inc.

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

C. ENFORCEMENT OF MANDATORY CONSERVATION AND RATIONING

1. The water use restrictions of the conservation program, in Section A of this rule, become mandatory when the rationing program goes into effect. In the event a customer is observed to be using water for any nonessential or unauthorized use as defined in Section A of this rule, the utility may charge a water use violation fine in accordance with Schedule No. 14.1.

2. The utility may, after one verbal and one written warning, install a flow-restricting device on the service line of any customer observed by utility personnel to be using water for any non-essential or unauthorized use as defined in Section A above.

3. A flow restrictor shall not restrict water delivery by greater than 50% of normal flow and shall provide the premise with a minimum of 6 Ccf/month. The restricting device may be removed only by the utility, only after a three-day period has elapsed, and only upon payment of the appropriate removal charge as set forth in Schedule No. 14.1.

4. After the removal of the restricting device, if any non-essential or unauthorized use of water shall continue, the utility may install another flow-restricting device. This device shall remain in place until water supply conditions warrant its removal and until the appropriate charge for removal has been paid to the utility.

5. If, despite installation of such flow-restricting device pursuant to the provisions of the previous enforcement conditions, any such non-essential or unauthorized use of water shall continue, then the utility may discontinue water service to such customer. In such latter event, a charge as provided in Rule No. 11 shall be paid to the utility as a condition to restoration of service.

6. Any monies collected by the utility through water use violation fines shall not be accounted for as income, but shall be accumulated by the utility in a separate account for disposition as directed or authorized from time to time by the Commission.

7. The charge for removal of a flow-restricting device shall be in accordance with Schedule No. 14.1.

(continued)

APPENDIX B

Agate Bay Water Company, Inc.

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

D. APPEAL PROCEDURE

Any customer who seeks a variance from any of the provisions of this water conservation and rationing plan shall notify the utility in writing, explaining in detail the reason for such a variation. The utility shall respond to each such request.

Any customer not satisfied with the utility's response may file an appeal with the staff of the Commission. The customer and the utility will be notified of the disposition of such appeal by letter from the Executive Director of the Commission.

If the customer disagrees with such disposition, the customer shall have the right to file a formal complaint with the Commission. Except as set forth in this Section, no person shall have any right or claim in law or in equity, against the utility because of, or as a result of, any matter or thing done or threatened to be done pursuant to the provisions of this water conservation and rationing plan.

E. PUBLICITY

In the event the utility finds it necessary to implement this plan, it shall notify customers and hold public hearings concerning the water supply situation, in accordance with Chapter 3, Water Shortage Emergencies, Sections 350 to 358, of the California Water Code. The utility shall also provide each customer with a copy of this plan by means of billing inserts or special mailings; notification shall take place prior to imposing any fines associated with this plan. In addition, the utility shall provide customers with periodic updates regarding its water supply status and the results of customers' conservation efforts. Updates may be by bill insert, special mailing, poster, flyer, newspaper, television or radio spot/advertisement, community bulletin board, or other appropriate methods.

APPENDIX B

Agate Bay Water Company, Inc.

SCHEDULE NO. 14.1

MANDATORY WATER CONSERVATION AND RATIONING

APPLICABILITY

TERRITORY

WATER USE VIOLATION FINE

(continued)

APPENDIX B

Agate Bay Water Company, Inc.

SCHEDULE NO. 14.1

(continued)

MANDATORY WATER CONSERVATION AND RATIONING

FLOW RESTRICTOR REMOVAL CHARGE

SPECIAL CONDITIONS

1. This tariff schedule shall remain in effect for period of six (6) months from the effective date set forth below.

2. There shall be no use of utility-supplied water for outside plants, lawn, landscape, and turf areas between the hours of 8:00 a.m. to 7:00 p.m., regardless of address or day of the month.

3. Water use violation fines may be applied to violations of Section A of Rule No. 14.1,which prohibits non-essential and unauthorized uses of water.

4. Water use violation fines must be separately identified on each bill.

5. All bills are subject to the reimbursement fee set forth on Schedule No. UF.

APPENDIX C

Agate Bay Water Company, Inc.

COMPARISON OF RATES

TEST YEAR 2005

A comparison of the existing and the recommended rates are as follows:

Quantity Rate: Present Rates New Rates Increase

Per 100 Cubic Feet (Ccf) $1.15 $1.42 23.10%

Service Charge per meter per year:

Annual Flat Rate Service per service connection:

Additional Single-Family Residential Unite: $261.42 $321.14 22.85%

Limited Annual Flat Rate Service $1057.78 $1,302.17 23.10%

Private Fire Protection Service $7.61 $9.37 23.10%

A comparison of annual bill for a ¾-inch pipe size under the annual flat service:

APPENDIX D

Agate Bay Water Company, Inc.

ADOPTED QUANTITIES

TEST YEAR 2005

1. Rate Base

2. Ad Valorem Taxes:

Tax Rate 1.08964%

3. Franchise Tax: $0

4. Service Connections:

5. Purchased Power (Approximated): $5,433

(continued)

APPENDIX D

Agate Bay Water Company, Inc.

ADOPTED QUANTITIES

TEST YEAR 2005

(continued)

6. Payroll:

7. Adopted Taxes:

Income Tax @ 22.14% of Net Income ($69,133) $15,306

APPENDIX E

Agate Bay Water Company, Inc.

REVENUES

TEST YEAR 2005

Pipe Size

Annual Flat Service

Number of Customers

Revenue

3/4 inch

$458.78

567

$260,128

1 inch

$484.43

5

$2,422

1 ¼ inch

$517.76

2

$1,036

1 ½ inch

$544.95

1

$545

2 inch

$602.03

4

$2,408

Additional unit connection

$321.14

16

$5,138

Limited Flat

$1,302.17

1

$1,302

Fire Protection ($/inch of service)

$9.37

7

(129" of service)

$1,208

Total Flat Service Revenue

    

$274,187.00

       

Quantity Charge:

Per Ccf

Water Sold

Quantity Revenues

-currently, no customers on this tariff

Not applicable

Not applicable

$0

       

Total Sales Revenues

$274,187

+ $0 =

$274,187

APPENDIX F

Agate Bay Water Company, Inc.

OPERATING RATIO CALCULATIONS

TEST YEAR 2005

RR = rom[O&M + D+ Taxes(no income tax)] + O&M + D + T

where

RR =  Revenue Requirement

rom =   rate of margin = 24%

O&M   = Operating and maintenance expense = $154,334

D =    Depreciation expense = $22,960

T =     Income and other taxes

RR = 24%*[$154,334 + $22,960 +$7,106 + $5,348] + $154,334 + $22,960 + ($5,807 + $9,499

+ $7,106 + $5,348)

= 0.24*$189,748 + $154,334 + $22,960 + $27,760

= $45,540 + $154,334 + $22,960 + $27,760

= $250,594 < $274,187 (Revenue Requirement using 12.4% rate of return)

APPENDIX G

Agate Bay Water Company, Inc.

CONSUMER PRICE INDICES

Year

2001

2002

2003

2004

2001-2004

Consumer Price Index

1.6%

2.4%

1.9%

3.3%

9.51%

APPENDIX H

Agate Bay Water Company, Inc.

PUBLIC MEETING NOTES

The 7 p.m. public meeting was held at 8318 North Lake Blvd, Kings Beach, which is on the north shore of Lake Tahoe. Besides CPUC staff Michael Yeo and ABWC representative, Steve Glazer, Duncan Davis, there were 10 other attendees who signed in the attendance sheet. Michael Yeo began the meeting and explained its purpose. At Michael Yeo's request, Steve Glazer distributed copies of the financial proposal to the audience, and proceeded to explain why the increase was necessary, the various expense items and the estimated costs associated with each.

There were many queries raised by the attendees; most were related to the high, proposed rate increase. The issues raised and explanations offered are as follows:

· On the cost of office space rental; this expense pertains only to the Carmichael office. There has never been a claim for the use of any other office space.

· On the issue on employee pensions and benefits, there were two employees that qualified in the last GRC. There are now three employees, with the addition of the owners' son, Duncan C. Davis. At the meeting, ABWC incorrectly responded that the wife of Duncan C. Davis was part of the company's pension program. A review of the documents the next day shows that the Health premiums of $11,192 and the IRA of $9,000 do not include Mrs. Duncan C. Davis.

· A ratepayer complained that the additional-unit meter rate should not be increased by 59%. The CPUC staff responded that he would look into his concern during the GRC review. (There are 16 additional-unit connections that are known to Agate Bay.)

· There were criticisms that Sun Club, a recreational facility, was not paying its fair share of the rates. - The Limited flat rate tariff (Schedule No. 2AL) was first established in 1964 when the club was built; the tariff pertains to the combined services of two ¾" and one unknown pipe-size. Unknown to those ratepayers in attendance, Sun Club has since acquired a separate 1" service for the tennis court and also a separate ¾ " service for the pier. So, Sun Club appears to be paying its fair share of the rates.

· One ratepayer wanted to know why he was charged the 1" connection rate. A field investigation the next day showed that she indeed had an 1" pipe.

· The same ratepayer also complained about not having a fire hydrant on her street, which is a private street. A North Tahoe Fire Protection District Marshall, who was present at the meeting, responded there were no tanker trucks in Carnelian Bay, and that the only way to respond to a fire in her street would be to run the fire hose from the closest hydrant on the public street.

· Another ratepayer complained about low water pressure. A field test measurement the next day showed that the water pressure was 59 psi, which is above the 25 psi required minimum pressure mentioned in the Tariff.

(continued)APPENDIX H

Agate Bay Water Company, Inc.

JUNE 14, 2005 PUBLIC MEETING NOTES

(continued)

· As for water conservation, ABWC stated that effort was currently voluntary, and mandatory conservation might be in force later. 10% voluntary conservation is Agate Bay's target. In the Consumers Confidence Report, an annual report that DHS requires ABWC to prepare for its customers, ABWC reminds customers to conserve water. Both CPUC staff and ABWC brought up the proposed Water Conservation and Rationing Plan, but there was no protest on the proposed tariff rule. ABWC mentioned that a public hearing is required before it is necessary to implement the Conservation Plan.
Water conservation statements are reminded in each billing statement which is twice a year. The Public Meeting attendees were more concerned that, presently under the flat rate tariff, there is no incentive for big users to conserve water. The discussion led to the mandatory installation of meters for all households to ensure that the big users pay their fair share of the amount of water used. The cost of installing meters was anticipated to be high. While all newly-constructed homes are presently required to have meter setters to allow for future installation of meters, many existing homes do not have them.

· Some audience members complained that part-time dwellers were subsidizing full-time dwellers on the water rates. Even though new homes are required to have meter setter installed to allow for future installation of meters, all new homes, so far, are being charged flat rates. Most homes still do not have meter setters.

· ABWC provided clarification on the relationship between pipe sizes and rates, and explained why larger pipe sizes have higher rates.

· A resident commented as to why Agate Bay did not have any reserve funds, and why pipe sections were failing. The ratepayer was commenting on ABWC's remarks about replacing 200' to 300' length of pipe per year. The CPUC staff explained that the Commission does not allow for reserve funds but will allow funds to be used for projected maintenance expenses. ABWC explained that pipe materials run into their fatigue and useful life, and need to be repaired and/or replaced.

· An attendee commented about having the NTPUD (North Tahoe Protection Utility District) taking over the water operation. The Commission staff responded that the residents would need to petition for such a change. The Commission staff added that, in other communities, petitions had been made before their elected officials to have other entities taking over their utility services. For example, in San Francisco, there was a ballot measure to have City and County of San Francisco take over the power utility from PG&E. The Commission staff also mentioned that the City of Davis was also exploring the option of having their power provided by SMUD instead of PG&E.

Not a single attendee complaint about the water quality.

The meeting ended at 9 p.m.

(continued)

APPENDIX H

Agate Bay Water Company, Inc.

JUNE 14, 2005 PUBLIC MEETING NOTES

(continued)

The following is a list of the ten persons, besides CPUC and ABWC staff, who attended the public meeting. Of the ten, only one also wrote in his protest letter.

            TABLE H

    LIST OF PUBLIC MEETING ATTENDEES

APPENDIX I

Agate Bay Water Company, Inc.

COMPLAINTS

The following is a list of 14 persons who wrote in their protest letters. Of the 14, only one also attended the public meeting.

            TABLE I

      LIST OF WRITE-IN PROTESTS

(continued)

APPENDIX I

Agate Bay Water Company, Inc.

COMPLAINTS

(continued)

Top Of Page