WELLESLEY ISLAND HOLDING CORP.

One Lincoln Center, Suite 330

Syracuse, New York 13202-1317

February 17, 2004

(Via UPS)

State of New York Department of Public Service

Three Empire State Plaza
Albany, NY 12223-1350

Att: Jack Agansky, Utility Engineer III

Water Rates Section - Office of Gas and Water

PETITION

• Acquisition of Thousand Island Club Water Company, Inc. by Wellesley Island

Holding Corp.
*
• Merger of Thousand Island Club Water Co., Inc. with Wellesley Island Water Corp,
also wholly owned by Wellesley Island Holding Corp.

• Authorization for Wellesley Island Water Corp. to borrow approximately $1,800,000

from New York State Environmental Facilities Corporation (EFC)

• Authorization to construct new facilities as outlined in the engineering report of

Bernier, Carr & Associates, P.C., Watertown, New York, dated October 2003 (copy
enclosed)

• Rate increase to pay for the new facilities

****************
Dear Jack:

Wellesley Island Holding Corp. ("WIHC"), Wellesley Island Water Corp. ("WIWC") and
Thousand Island Club Water Co., Inc. ("TICWC") hereby jointly petition the New York State
Public Service Commission for approval of following:

1) For WIHC to purchase the capital stock of the TICWC.

2) Merger of TICWC with WIWC, also wholly owned by WIHC.

The acquisition of TICWC was encouraged by the New York State Health Department and was
necessary to provide enough additional edu's to make this project economically feasible.

Please note that the TICWC wells have been disconnected from the system. Since spring of
2003, WIWC has been supplying water from the St. Lawrence River to all of its customers.

Once the PSC has approved the merger, it is the intent that the TICWC corporate entity will be
dissolved.
 State of New York Department of Public Service
Att: Jack Agansky, Utility Engineer III
Water Rates Section - Office of Gas and Water
Page 2
February 17, 2004

3) Authorization for Wellesley Island Water Corp. to borrow approximately $1,800,000

from New York State Environmental Facilities Corporation (EFC)

4) Approval of construction of new facilities, including a new ground water source (two
[2] seven inch gravel over burden wells, new pumping facility, new water storage tank
and new water main, as outlined in the engineering report of Bernier, Carr &
Associates, P.C., Watertown, New York, dated October 2003

5) Authorization for rate increase, effective calendar year 2004.

The rates charged need to be increased in order to be able to pay the principal and interest on
* the loan from EFC. The rate per edu needs to be $720 per annum (up from $635) depending
V on whether the New York State Department of Health requires package filtration. See the
"Estimated Billing Units" and "Estimated Annual Costs" prepared by Bernier, Carr &
Associates, P.C. engineering report, dated February 10, 2004 (copy enclosed)

The community being served is ninety (90%) percent seasonal and resort-type utilization. The
W1WC prefers to bill on or about June l" of each year to permit customers to pay when the
water is being used.

The original WIWC customers have traditionally been billed annually (from June T1 through
May SI5') with a flat rate per edu of $250.

The TICWC customers have been billed on a calendar year basis at various rates, the rate
having been determined dependent upon the size of the edu.

In the future, because of the proposed increase in the annual charge, WIWC will give the
customer the option of two or three payments, if requested.

It is our understanding that we need an approval letter from the PSC for the proposed
improvements as well as authorization to bill the customers in order to create a debt repayment
fund in advance of the actual borrowing.

In addition to the items listed above, we are enclosing copies the following for your reference:

• letter dated December 29, 2003 from Robert J. Campany, P.E. of Bernier, Carr &
Associates, P.C. to Wellesley Island Water Corp. (Ronald V. Sharpe), with Contract
Amendment No. 1 to Engineering Agreement, dated October 25, 2001

• Stock Purchase Agreement, dated December 31, 2002, by and among Wellesley Island
Holding Corp., Darl K. Johnston and Arthur A. MacKnight
 State of New York Department of Public Service
Att: Jack Agansky, Utility Engineer III
Water Rates Section - Office of Gas and Water
Page 3
February 17, 2004

• Preliminary Engineering Report prepared by Bernier Carr & Associates, P.C. for
Wellesley Island Water Corp., dated October 2003

• letter dated November 14, 2003 from New York Department of Health (Teresa L.
Emmitt, P.E., Assistant Sanitary Engineer, Bureau of Public Water Supply Protection)
to Robert J. Campany, P.E. of Bernier, Carr & Associates, P.C.

• letter dated January 30, 2004 from Robert J. Campany, P.E. of Bernier, Carr &
Associates, P.C. to State of New York Department of Health (Stephen E. Powers,
P.E., District Sanitary Engineer)

m • letter dated February 11, 2004 from State of New York Department of Health (Stephen
E. Powers, P.E., District Sanitary Engineer) to Robert J. Campany, P.E. of Bernier,
Carr & Associates, P.C.

• status report letter concerning the water system improvements from WIWC to the
Homeowners, dated February 12, 2004

If you require additional documents or information, please advise.

Very truly yours,

WELLESpE^ ISLAND HOLDING CORP.

Ronald V. Sharpe, President

RVS/pjp/Encs.
 STATE OF NEW YORK
DEPARTMENT OF PUBLIC SERVICE

INTEROFFICE MEMORANDUM

February 19, 2 0 04

TO: Bill Whyman, General Files

FROM: Jack Agansky, Water Rates SectiorCU/|//J

SUBJECT Petition of Wellesley Island Water Corp,

I just received this document. They are requesting a

number of things through one document which we will address
individually. Please disregard the other items and file this
as:

Joint Petition of Wellesley Island Water Corp. and

Thousand Island Club Water Company, Inc. for Authority to Merge
Thousand Island Club Water Company, Inc with Wellesley Island
Water Corp. and to Dissolve Thousand Island Club Water Company,
Inc. Upon Receiving Commission Approval.

If you have any questions, please call me at 62432.