by MARK ST.J. COUHIG

Sequim Gazette

State regulators have penalized a Clallam County water company for failing to comply with state laws and regulations governing its services, rates and charges.

Lowper, Inc.’s water system serves seven customers just outside of Sequim on the south side of U.S. Highway 101. The system is owned by David Dorland, president of Iliad, Inc., a landscape/irrigation and sprinkler system company in Seattle.

The Washington Utilities and Transportation Commission (UTC) fined the company $10,500 for 105 violations of state law, including unauthorized services and improper billing practices.

A commission statement said agency officials learned of the unregulated water utility when customers complained about high water bills. UTC says the average monthly customer water bill, based on June 2010 data, was more than $81 a month plus charges for usage.

UTC also says Lowper, Inc. must demonstrate why the company isn’t subject to state regulation. In a written notice of the recent fine, UTC said the utility should have filed an initial tariff on Oct. 4, 2009, when “it met the requirements for regulation set forth in state law.”

The UTC notice says, “The company refused to do so and has repeatedly maintained that it was in the process of selling the water system to the county.”

What’s next

Mike Howe, executive communications coordinator for the Clallam County Public Utility District, disagreed, saying, “We are not in negotiations with Dorland and have not been. He sent us a letter in October 2009 saying he was interested in selling it to us, but the terms were not of interest to us.” Howe said PUD does “provide him water and (we) have been doing so since June 2005.”

Howe said that in the agreement between PUD and Lowper, Inc., “There is a stipulation that in 20 years he would offer it to us at no cost.” Howe also noted, “We will have the option to turn it down.”

Jim Ward, a regulatory analyst in the Water Section at UTC, said the next step is a hearing before administrative law judge Marguerite Freelander.

“The company will need to show up and provide evidence why they shouldn’t be regulated,” he said. Water companies subject to regulation are required to file a tariff, which Ward defined as a price list and written rules “as to how the company will treat customers and how customers will treat the company.”

Whether the company will be required to pay the fine is “up to the judge,” Ward said.

“We established Oct. 4, 2009, as the date they should have been regulated,” Ward said. Following that date, Lowper, Inc. operated for 15 months, sending out seven bills a month until February 2011. Each bill is subject to a $100 fine, bringing the total fine to $10,500.

The hearing will be held at 1:30 p.m., April 27, at UTC headquarters in Olympia.

UTC regulates private water companies operating within the state that have 100 or more connections or that charge more than $471 a year per customer.

Reach Mark Couhig at mcouhig@sequimgazette.com.