Catherine J.K. Sandoval is the assigned Commissioner and Gary Weatherford is the assigned ALJ in this proceeding.
Findings of Fact
1. Each of the complainants in Case 09-11-019 (collectively, the complainants) is, or formerly was, a resident at the Sunbird Mobile Park (Sunbird) in the East Coachella Valley town of Thermal in Riverside County, California.
2. Sunbird provides water service only to its residents, approximately 450 in number, from water supplies and facilities that it owns and that are not otherwise dedicated to public service. The water system at Sunbird is composed of a 400-foot deep well, two 5,000-gallon pressurized storage tanks, six 10,000-gallon gravity storage tanks and a pipeline distribution system. Sunbird delivers water to meters located at the spaces of its tenants by means of its own distribution system, but has plans, dependent on funding, to disconnect that distribution system from the well during 2012 and connect it to the water supply of the Coachella Valley Water District, a public agency not regulated by the Commission.
3. Sunbird is owned by the Martin Family Trust, of which Defendants James Martin and Betty Martin are Trustees. Defendant Hawkeye Asset Management manages Sunbird.
4. The substance of the instant complaint is that the water rates charged by Sunbird are unjust and unreasonable and that the water service is inadequate due to substandard water quality.
5. Concerned about excessive discharges into its septic system, Sunbird adopted its current four-tiered rate structure in June of 2006, charging progressively more per cubic foot in each tier for consumption of larger quantities of water. In doing so Sunbird intended to encourage its tenants to limit water use to the 250 g.p.d. standard set out in its waste discharge permit and in the Uniform Plumbing Code in order to avoid overburdening the septic system.
6. In D.10-05-020 (May 6, 2010), the Commission ordered the suspension of Tiers 3 and 4 at Sunbird, pending the outcome of this ratemaking proceeding.
7. The preponderance of evidence shows that water services have been billed separately and not combined with charges, if any, for septic services. Any intent on the part of Sunbird to charge for septic services outside the rent and in conjunction with water charges was not communicated to the residents in a timely or effective manner.
8. There is a preponderance of evidence of unjust and unreasonable water rates and of inadequate water service in the record in this proceeding.
9. The well water at Sunbird contains arsenic that has been tested at levels exceeding the safe drinking water standards that have been in effect since 2006. Residents at Sunbird have been notified by Sunbird, as directed by the Riverside County Department of Environmental Health, that continued consumption of that well water may have potential adverse health effects.
10. Sunbird has made bottled water available for purchase at cost by the residents. In addition, since March of 2011, Sunbird has voluntarily provided POU filtered well water at a central spigot on the Sunbird premises at no special charge, pending connection to the supply of the Coachella Valley Water District which meets safe drinking water standards.
11. Defendants' regulatory expenses in the form of attorney's fees and costs are non-recurrent expenses and should be excluded from operating expenses for purposes of calculating revenue requirements.
12. There is not sufficient evidence in the record to allow inclusion of depreciation in the calculation of Sunbird's revenue requirements.
13. There is sufficient evidence in the record from which to infer a reasonable annual management expense related to water service of $600.
14. There is sufficient evidence in the record to allow inclusion of an annual water testing expense of $3,000 for 2011 and 2012.
15. There is sufficient evidence in the record to support as reasonable a 13.6 percent allocation of water meter expense to water service.
16. There is not sufficient evidence of non-income taxes to recognize a claim of such taxes relative to operating expenses.
Conclusions of Law
1. Pursuant to Pub. Util. Code § 2705.6, the Commission has jurisdiction in this proceeding to determine whether Sunbird's water rates are just and reasonable, and whether the water service is adequate. That jurisdiction should cease if and when the connection to the local well is replaced by a connection to the Coachella Valley Water District and charges to residents for water are limited entirely by the amount the District charges Sunbird.
2. Under Civil Code § 798.41 separate billing for utility services not included in the rent for mobile home spaces should be clear and unambiguous.
3. Pub. Util. Code § 701.10, applicable to water corporations, should not be applied to Sunbird, which is not a water corporation.
4. By a preponderance of the evidence in the record, the rates charged for water service at Sunbird should be found to be unjust and unreasonable and just and reasonable rates should be substituted.
5. By a preponderance of the evidence in the record, the water service provided by Sunbird should be found to be inadequate and the joint settlement agreement providing for filtered water at no special charge should be approved.
IT IS ORDERED that:
1. The rate design and associated water rates charged for water service by the Sunbird Mobile Home Park are not just and not reasonable. Sunbird Mobile Home Park shall implement the following rate design and rates instead:
Customer Service Charge
2011: $7.25/monthly billing cycle
2012: $6.00/monthly billing cycle
0 - 10 hundred cubic feet (ccf)
$0.90 per ccf
Over 10 ccf
$1.30 per ccf
2. No later than May 1, 2012, Sunbird Mobile Home Park shall refund, through a credit on the water bill, each submetered connection a sufficient amount to refund, in the aggregate, $495 that was overcollected for 2010 and 2011.
3. Pending connection to the Coachella Valley Water District, Sunbird Mobile Home Park shall:
a. Separately track all water and septic service related expenses;
b. Bill residents for water service separate from cost recovery, if any, for septic service;
c. Modify its rates for water services for 2012 as indicated in Ordering Paragraph No.1 above;
d. Reconcile the actual operating expenses and revenues for 2011, carrying forward the net amount into 2012; and
e. Establish balancing accounts for 2012 to record actual operating expenses and revenues. Interest to be computed based on the 90 day commercial paper rate as reported in the Federal Reserve Publication H-15.
4. Pending connection to the Coachella Valley Water District, Sunbird Mobile Home Park shall:
a. Continue to provide to its residents water that satisfies safe drinking water requirements using the installed Point of Use filtration system;
b. Continue to have bottled water available to residents at cost on the premises;
c. Post in a conspicuous area on the premises in English and Spanish a notice of the availability of filtered water through the POU filtration system and of bottled water. Such notice should also be included in the monthly water bills to Sunbird residents; and
d. Take all reasonable precautions to prevent any contamination of the well water by the septic system.
5. Sunbird Mobile Home Park shall file a letter with the Director of the Commission's Division of Water and Audit, at the end of 2012, or upon the completion of the connection to the District, whichever occurs first, requesting an adjustment for over-or-under collections in accordance with actual operating expenses and revenues for 2011 and 2012.
6. The Parties joint motion for adoption of their agreement effective January 5, 2010, to settle partially the rate setting as to issues of water quality is granted and that agreement, appended hereto as Attachment A, is adopted.
7. Any and all other outstanding requests and motions are denied.
8. Decision 10-05-020 is superseded by this decision.
9. Case 09-11-019 is closed.
This order is effective today.
Dated February 16, 2012, at San Francisco, California.
MICHAEL R. PEEVEY
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
MARK J. FERRON
Partial Settlement and Mutual Release Agreement
Spanish Executive Summary
RESUMEN DE CONFERENCIANTE EN ESPAÑOL SOBRE
LA DECISIÓN DE FIJAR TARIFAS DE AGUA DEL PARQUE DE CASAS RODANTES Y LAS CONDICIONES DEL SERVICIO DE AGUA, Y LA OBLIGATORIEDAD DE LAS CUENTAS VINCULADAS
(Los siguientes extractos traducidos al español han sido tomados de la versión completa en inglés de la decisión C.09-11-019, Hernandez y otros contra V. Sunbird Mobile Home Park y otros).