Cascadia Water customer rates to rise by 49%

Published 1:30 am Friday, October 3, 2025

Rates will increase for customers of Cascadia Water, but not as significantly as originally proposed.

This week, the Washington Utilities and Transportation Commission issued a final order rejecting the tariff filed by Cascadia Water, a company serving over 1,000 customers on Whidbey. The commission approved a 49.1% rate increase, down from the 107% increase the company had previously requested, finding that the company did not provide adequate documentation of its decision-making process for 14 major projects, some of which are located on Whidbey.

This decision concludes a year-and-a-half-long process that involved six rounds of testimony, two evidentiary hearings spanning three days and hundreds of comments from customers opposed to the rate hikes.

But it may not be over yet. All parties have 10 days to file a motion for reconsideration – an appeal to the commission – and 30 days to appeal to the Superior Court.

The 49.1% rate increase will result in $1.1 million in revenue for Cascadia Water, which owns water systems on Whidbey, the Kitsap Peninsula and the mainland. The company has spent a significant amount of money on capital improvements over the past few years, but it comes at a steep cost to ratepayers.

“When you only have 4,000 people to pay those rates, it can get very expensive very quick,” Tad Robinson O’Neill, head of the state Attorney General’s Office of Public Counsel, said. The office represented the public interest in the rate case.

His hope is that the commission’s decision is the best way to balance the needs of community members to pay their rising bills against the need to have water systems that work and equipment that doesn’t fail.

“Reading those comments, as I do in all these cases, I’m reminded by how dramatic these impacts are,” he said. “There are a lot of people on the island and on the peninsula that are on fixed incomes, and this is hard.”

As part of the decision, the commission determined that Cascadia Water would receive a 8.11% rate of return on prudent investments, rather than the 11.4% rate initially requested by the company. This represents a departure from the commission’s 23-year practice of approving 12% rates, according to Kent Hanson, a retired attorney and Whidbey resident. He volunteered his time to represent the Water Consumer Advocates of Washington, or WCAW, a group of Cascadia Water customers that submitted testimony against the tariff increase.

Hanson said WCAW believes the immediate results of the rate case are good because “all water companies are likely to be held to more stringent standards in ensuring that capital improvements are prudent” and “rates of return reflect actual costs of capital.”

In addition, the commission rejected the notion that the same water rates should apply to 29 separate water systems.

“The holding in this case should require water companies to prove that a single tariff for the customers of separate systems will not result in price discrimination, i.e., will not require customers of low-cost systems to perpetually subsidize customers of high-cost systems,” Hanson said.

Culley Lehman, Cascadia Water’s general manager, said that the company is still reviewing the order and does not have specific comments at this time. Regardless of the decision, Lehman said, the No. 1 priority at Cascadia Water is to continue providing safe and reliable drinking water to customers.

O’Neill noted the Lehman family’s long history in the community.

“We weren’t on the same side as them necessarily in this particular case but they are definitely dedicated to Whidbey Island and the customers they serve in Kitsap County,” he said.

Cascadia Water is a subsidiary of NW Natural Water, which is a subsidiary of NW Natural Holdings.

O’Neill said this rate case mirrors a fascinating trend across the nation of companies acquiring family-run water systems, often with deferred maintenance, with promises of replacing reservoirs, installing generators and other fixes.

“The tricky part is how much it’s going to cost and who’s going to pay for it,” he said.