STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
December 22, 2009 File No.: 602-19
TO: All Interested Parties
Enclosed is draft Resolution W-4821 of the Division of Water and Audits. It will be on the Commission's January 21, 2010 agenda. The Commission may then act on this Resolution or it may postpone action until later.
When the Commission acts on the draft resolution, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare a different resolution. Only when the Commission acts does the resolution become binding on the parties.
Parties to this matter may file comments on this draft resolution. An original and 2 copies of the comments, with a certificate of service, should be submitted to:
Division of Water and Audits, Third Floor
Attention: Peter Liu
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102
Parties may submit comments on or before January 11, 2010. The date of submission is the date the comments are received by the Division of Water and Audits. Parties must serve a copy of their comments on the utility on the same date that the comments are submitted to the Division of Water and Audits.
Comments shall be limited to five pages in length plus a subject index listing the recommended changes to the draft resolution, a table of authorities and appendix setting forth the proposed findings and ordering paragraphs.
Comments shall focus on factual, legal or technical errors in the draft resolution, and shall make specific reference to the record or applicable law. Comments which fail to do so will be accorded no weight and are not to be submitted.
Persons interested in comments of parties may write to Peter Liu or telephone him at (415) 703-1390.
/s/ RAMI KAHLON
Rami Kahlon, Director
Division of Water and Audits
Enclosures: Draft Resolution W-4821
Certificate of Service
Service List
WATER/RSK/PTL/jlj DRAFT AGENDA ITEM #9111
DIVISION OF WATER AND AUDITS RESOLUTION NO. W-4821
Water & Sewer Advisory Branch January 21, 2010
(RES. W-4821), DEL ORO WATER COMPANY (Del Oro), FERNDALE DISTRICT (Ferndale). ORDER AUTHORIZING A GENERAL RATE INCREASE (GRC), PRODUCING ADDITIONAL ANNUAL REVENUE OF $23,122 OR 5.15% FOR TEST YEAR (TY) 2009.
SUMMARY
By draft Advice Letter (AL) filed on July 17, 2009 and amended on July 28, 2009, Ferndale requested an increase of $35,907 or 7.40% in annual gross revenue for TY 2009 to recover operating expenses and earn an adequate return on its plant improvement. The Division of Water and Audits (Division) accepted Ferndale's amendment as complete for filing on July 29, 2009.
For TY 2009, this Resolution grants an increase in gross revenues of $23,122 or 5.15% which is estimated to provide a rate of return of 10.80%.
BACKGROUND
Del Oro is a Class B water utility. Ferndale has requested authority under Rule 7.6.2 of General Order 96-B and Water Industry Rule 7.3.3 (5), and Section 454 of the Public Utilities Code to increase its rates by $35,907 or 7.40%. The purpose of the rate increase is to recover operating expenses and to provide an adequate rate of return. Ferndale's request shows 2009 gross revenues of $449,378 at present rates increasing to $485,285 at the proposed rates.
Ferndale's present rate became effective on July 20, 2009, by approval of AL 240, which authorized an interim rate increase of $449 or 0.1%, subject to refund or increase to the rates established in this GRC. The last general rate increase was adopted by Res. W-4697, dated June 26, 2008, which authorized a general rate increase of $79,734 or 19.56% and a rate of return of 10.8%.
Ferndale currently serves 757 residential metered rate customers in its service area in the City of Ferndale and adjacent unincorporated territory, in Humboldt County. The majority of customers are full-time residents, being a mixture of retired or working individuals.
NOTICE, PROTESTS, AND PUBLIC MEETING
A notice regarding the general rate increase was mailed to each customer on September 21, 2009. A public meeting was held on October 28, 2009, and was attended by 10 customers. Division staff explained the process of the rate increase request before the Commission. Ferndale's representative reviewed the rate increase request. Division staff and Ferndale's representative responded to various questions from the attendees. Division received one protest letter for the rate increase.
DISCUSSION
The Division made an independent analysis of Ferndale's operations. Appendix A shows Ferndale's and the Division's estimated summary of earnings at present, proposed, and recommended rates for TY 2009. Ferndale is in agreement with the summary of earnings and the Division's recommended rates in Appendices A and B. The Division recommends the rate increases and resulting rates shown in Appendix B be approved.
The Division staff reviewed operating expenses including purchased power, other volume related, employee labor, materials, contract work, transportation expenses, other plant maintenance, office salaries, management salaries, employee pension & benefits, uncollectibles, office services & rentals, office supplies and expenses, professional services, insurance, regulatory commission expense, general expenses, depreciation, and taxes other than income. Division staff verified operating expenses and the rate base by reviewing the 2008 annual report and supporting documents for substantiation and accuracy. The Division staff used 2008 annual report for expenses and rate base when actual bills were not available and included the amounts that were deemed reasonable and prudent.
Ferndale's current rate structure consists of one schedule: No. FD-1A, Annual General Metered Service. At the recommended rates the increase in revenue will be $23,122 or 5.15% for TY 2009.
At the Division's recommended rates shown in Appendix B, the monthly bill for a residential customer using 10 Ccf (One Ccf equals 100 cubic feet) of water with a 5/8 x 3/4-inch meter will increase from $55.28 to $58.25 which is $2.97 or 5.37%. A comparison of customer bills at present and recommended rates is shown in Appendix C. The adopted quantities and tax calculations are shown in Appendix D.
COMPLIANCE
There are no outstanding Commission orders requiring system improvements. The utility has been filing annual reports as required.
COMMENTS
Public Utilities Code Section 311(g) (1) provides that resolutions generally must be served on all parties and subject to at least 30 days public review and comment prior to a vote of the Commission.
Accordingly, this draft Resolution was mailed to the utility and protestants and made available for public comment on December 22, 2009.
FINDINGS
1. Ferndale currently serves 757 residential metered rate customers in its service area in the City of Ferndale and adjacent unincorporated territory, Humboldt County.
2. Ferndale's present rate became effective on July 20, 2009, by approval of AL 240, which authorized an interim rate increase of $449 or 0.1%, subject to refund or increase to the rates established in this general rate case.
3. The last general rate increase was adopted by Resolution W-4697, dated June 26, 2008, which authorized a general rate increase of $79,734 or 19.56% and a rate of return of 10.8%.
4. The Division of Water and Audits' staff verified operating expenses and the rate base by reviewing the 2008 annual report and supporting documents for substantiation and accuracy.
5. The Division of Water and Audits' staff used 2008 annual report for expenses and rate base when actual bills were not available.
6. A notice regarding the general rate increase was mailed to each customer on September 21, 2009. The Division of Water and Audits received one protest letter for the rate increase.
7. There are no outstanding Commission orders requiring system improvements.
8. Ferndale is in agreement with the summary of earnings and the Division of Water and Audits' recommended rates in Appendices A and B.
9. The Division of Water and Audits' recommended earnings (Appendix A) are reasonable and should be adopted.
10. The rates recommended by the Division of Water and Audits (Appendix B) are reasonable and should be adopted.
11. The quantities (Appendix D) used to develop the Division of Water and Audits' recommendations are reasonable and should be adopted.
THEREFORE IT IS ORDERED THAT:
1. Authority is granted under Public Utilities Code Section 454 to Del Oro Water Company, Ferndale District, to file an advice letter incorporating the summary of earnings and the revised rate schedule attached to this resolution as Appendices A and B, respectively, and concurrently cancel its presently effective Schedule No. FD-1A, Annual General Metered Service. The effective date of the revised rate schedule shall be five days after the date of its filing.
2. The quantities (Appendix D) used to develop the Division of Water and Audits' recommendations are adopted.
3. Del Oro Water Company, Ferndale District, is authorized to file an advice letter within 60 days from the effective date of this resolution to collect under-collected revenues over a six-month period from the interim rate date to the effective date of the new rates.
4. This resolution is effective today.
I certify that the foregoing resolution was duly introduced, passed, and adopted at a conference of the Public Utilities Commission of the State of California held on January 21, 2010; the following Commissioners voting favorably thereon:
PAUL CLANON
Executive Director
APPENDIX A
DEL ORO WATER COMPANY
FERNDALE DISTRICT
Summary of Earnings - Test Year 2009
Utility Present |
Estimated Proposed |
Branch Interim |
Estimated Proposed |
Adopted | ||
Rates |
Rates |
Rates |
Rates |
Rates | ||
Operating Revenues | ||||||
Metered Water Revenue |
$449,378 |
$485,285 |
$449,378 |
$472,500 |
$472,500 | |
Total Revenue |
449,378 |
485,285 |
449,378 |
472,500 |
472,500 | |
Operating Expenses |
||||||
615 |
Power |
8,785 |
8,785 |
8,084 |
8,084 |
8,084 |
618 |
Other Volume Related |
4,341 |
4,341 |
4,341 |
4,341 |
4,341 |
630 |
Employee Labor |
95,623 |
95,623 |
95,623 |
95,623 |
95,623 |
640 |
Materials |
5,912 |
5,912 |
5,912 |
5,912 |
5,912 |
650 |
Contract Work |
3,836 |
3,836 |
3,836 |
3,836 |
3,836 |
660 |
Transportation Expenses |
13,114 |
13,114 |
13,114 |
13,114 |
13,114 |
664 |
Other Plant Maintenance |
520 |
520 |
520 |
520 |
520 |
670 |
Office Salaries |
43,204 |
43,204 |
43,204 |
43,204 |
43,204 |
671 |
Management Salaries |
12,723 |
12,723 |
12,723 |
12,723 |
12,723 |
674 |
Employee Pensions and Benefits |
33,245 |
33,245 |
33,245 |
33,245 |
33,245 |
676 |
Uncollectibles |
606 |
606 |
606 |
606 |
606 |
678 |
Office Services and Rentals |
9,301 |
9,301 |
9,301 |
9,301 |
9,301 |
681 |
Office Supplies and Expenses |
20,447 |
20,447 |
20,447 |
20,447 |
20,447 |
682 |
Professional Services |
2,486 |
2,486 |
2,486 |
2,486 |
2,486 |
684 |
Insurance |
12,921 |
12,921 |
12,921 |
12,921 |
12,921 |
688 |
Regulatory Commission Expense |
1,875 |
1,875 |
1,875 |
1,875 |
1,875 |
689 |
General Expense |
1,727 |
1,727 |
1,727 |
1,727 |
1,727 |
Subtotal |
270,666 |
270,666 |
269,965 |
269,965 |
269,965 | |
403 |
Depreciation |
45,631 |
45,631 |
43,954 |
43,954 |
43,954 |
408 |
Taxes Other Than Income |
28,713 |
28,713 |
25,230 |
25,230 |
25,230 |
409 |
State Income Taxes |
10,364 |
10,922 |
7,726 |
9,770 |
9,770 |
410 |
Federal Income Taxes |
20,211 |
24,793 |
15,338 |
22,542 |
22,542 |
Total Deductions |
375,585 |
380,725 |
362,213 |
371,461 |
371,461 | |
Net Revenue |
73,793 |
104,560 |
87,165 |
101,039 |
101,039 | |
Rate Base | ||||||
Average Plant |
1,524,204 |
1,524,204 |
1,499,610 |
1,499,610 |
1,499,610 | |
Average Accum Dep |
502,374 |
502,374 |
510,365 |
510,365 |
510,365 | |
Net Plant |
1,021,830 |
1,021,830 |
989,245 |
989,245 |
989,245 | |
Plus: |
Working Cash |
22,820 |
22,820 |
22,820 |
22,820 |
22,820 |
Mat'l & Supplies |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 | |
Less: |
Advances |
72,753 |
72,753 |
70,050 |
70,050 |
70,050 |
Contributions |
10,888 |
10,888 |
11,168 |
11,168 |
11,168 | |
Total Rate Base |
968,009 |
968,009 |
937,847 |
937,847 |
937,847 | |
ROR = |
Net Rev/Rate Base |
7.623% |
10.80% |
9.29% |
10.80% |
10.80% |
(END OF APPENDIX A)
APPENDIX B
DEL ORO WATER COMPANY
FERNDALE DISTRICT
Schedule No. FD-1A
ANNUAL GENERAL METERED SERVICE
Test Year 2009
APPLICABILITY
Applicable to all metered water service.
TERRITORY
The City of Ferndale and adjacent unincorporated territory, Humboldt County.
RATES
Per Meter
Per Month
Quantity Rate:
For all water delivered per 100 cu. ft. $ 3.95 (I)
Service Charge:
For 5/8 x ¾ inch meter $ 18.75 (I)
For ¾ inch meter $ 28.13 |
For 1 inch meter $ 46.88 |
For 1-1/2 inch meter $ 93.75 |
For 2 inch meter $ 150.00 |
For 4 inch meter $ 468.75 |
For 6 inch meter $ 937.50 |
For 8 inch meter $1,500.00 (I)
The Service Charge is a readiness-to-serve charge which is
applicable to all metered service and to which is added the
charge for water used computed at the quantity rates.
(END OF APPENDIX B)
APPENDIX C
FERNDALE DISTRICT
COMPARISON OF RATES
TEST YEAR 2009
Interim Recommended Amount Percent
Rates Rates of Increase Increase
Service Charge:
For 5/8 x ¾-inch meter $18.04 $18.75 $0.71 3.94%
For 3/4-inch meter $27.06 $28.13 $1.07 3.95%
For 1-inch meter $45.10 $46.88 $1.78 3.95%
For 1 1/2-inch meter $90.20 $93.75 $3.55 3.94%
For 2-inch meter $144.32 $150.00 $5.68 3.94%
For 4-inch meter $451.00 $468.75 $17.75 3.94%
For 6-inch meter $902.00 $937.50 $35.50 3.94%
For 8-inch meter $1,443.20 $1,500.00 $56.80 3.94%
Quantity Rate:
All water per 100 cu.ft. $3.724 $3.95 $0.23 6.07%
A monthly bill comparison for a customer with a 5/8 x ¾-inch meter is shown below:
Usage
100 cu.ft.
5 $36.66 $38.50 $1.84 5.02%
10 $55.28 $58.25 $2.97 5.37%
15 $73.90 $78.00 $4.10 5.55%
(END OF APPENDIX C)
APPENDIX D
DEL ORO WATER COMPANY
FERNDALE DISTRICT
ADOPTED QUANTITIES
TEST YEAR 2009
1. Purchased Power
Total Cost $ 8,084
2. Water Sales in Ccf 65,636
3. Payroll
Employee Labor $96,623
Office Salaries $43,204
Management Salaries $12,723
4. Payroll Taxes $16,981
5. Property Taxes $ 8,249
6. Service Connections - Meter Size
5/8 x 3/4" 727
3/4" 7
1" 13
1-1/2" 5
2" 3
4" 0
6" 1
8" 1
Total Metered 757
Adopted tax calculation
1. Operating Revenues $472,500
2. Expenses 269.965
3. Depreciation 43,954
4. Payroll Taxes 16,981
5. Property Taxes 8,249
6. Interest Expense 22,833
7. Taxable Income for State Tax 110,518
8. State Tax (8.84%) 9,770
9. Taxable Income for FIT 100,748
10. Federal Tax 22,542
(END OF APPENDIX D)
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of Draft Resolution W-4821 on all parties in this filing or their attorneys as shown on the attached list.
Dated December 22, 2009, at San Francisco, California.
/s/JOSIE L. JONES
Josie L. Jones
NOTICE
Parties should notify the Division of Water and Audits, Third Floor, California Public Utilities Commission, 505 Van Ness Avenue, San Francisco, CA 94102, of any change of address to ensure that they continue to receive documents. You must indicate the Resolution number on which your name appears.
SERVICE LIST
DRAFT RESOLUTION W-4821
Phillip and Diane Ostler
P. O. Box 1439
Ferndale, CA 95536-1439
Mr. and Mrs. Mesman
P. O. Box 1017
Ferndale, CA 95336-1017
Martin LeMasters
P. O. Box 1042
Ferndale, CA 95336-1042
Milo and Dee Johnson
P. O. Box 1055
Ferndale, CA 95536-1055
Dan Tubbs
P. O. Box 475
Ferndale, CA 95536-475
Cliff Hughes
P. O. Box 146
Ferndale, CA 95536-146
Sheila Sutherland
P. O. Box 354
Ferndale, CA 95536-354
Richard Hooley
1009 Main Street
Ferndale, CA 95536
Robert S. Fortino
President
Del Oro Water Company, Inc.
Drawer 5172
Chico, CA 95927
