1. In D.04-05-023, the Commission found reasonable a 34.6% increase in Felton District for test year 2003, and a further 7.1% for 2004, but deferred imposing the higher rates immediately out of concern for their possible rate shock effect on Felton customers. Instead, CalAm was required to continue charging its then-current Felton rates, to accumulate the shortfall in a balancing account, and to file a new application proposing district consolidation and a method to amortize the accumulated balancing account shortfall.
2. CalAm has complied with D.04-05-023, Ordering Paragraph 12, by filing this application.
3. Although the guidelines are not dispositive, they are helpful in evaluating CalAm's rate consolidation proposal.
4. Consolidating Felton and Monterey Districts for ratemaking does not meet the guidelines' proximity criterion, rate comparability criterion, or water supply criterion.
5. Consolidating Felton and Monterey Districts for ratemaking does meet the operation criterion.
6. The rate comparisons CalAm has provided are not meaningful because they were based on the Monterey standard rate design that few if any Monterey customers pay, and because the customer effects would vary greatly depending on what consumption levels are assumed. The intermediate and long-term rates that would result from this consolidation are impossible to quantify with even a modest degree of confidence.
7. The revenue requirement estimates CalAm has provided are useful as surrogates for comparing overall district rate levels.
8. Under a combined rate structure of the type CalAm proposes, Monterey customers would provide Felton customers significant and increasing subsidies in the coming years.
9. Using CalAm's figures, the subsidies Monterey customers would be providing to Felton customers would occur at the same time CalAm projects Monterey's stand-alone revenue requirement to climb more than 130%. Felton customers' stand-alone revenue requirement would climb 15% over the same period.
10. CalAm's proposal could widen, rather than narrow, today's rate disparity between Monterey and Felton Districts after the first few years.
11. Consolidating Monterey and Felton Districts for ratemaking would generate no net operating efficiencies.
12. If the districts were consolidated, CalAm would have to invest more effort in ensuring costs are accurately segregated between them, and thus CalAm's accounting expenses in this area would be higher than without consolidation.
13. Consolidation would generate additional regulatory costs and burdens for CalAm, ORA, the other parties intervening in CalAm's general rate cases, and the Commission.
14. CalAm's proposed consolidation would not affect service quality provided to either district.
15. The possibility of public acquisition is not a factor in our decision in this proceeding.
16. Public opinion in both districts is against CalAm's proposed consolidation.
17. Stakeholders representing Sacramento District ratepayers' interests could be expected to have strong views if they were asked to subsidize Felton ratepayers, yet they have not been provided notice and an opportunity to present those views in this proceeding.
18. Consolidating Felton with Sacramento is not a viable solution to Felton rate shock in this proceeding.
19. Consolidating Felton and Monterey Districts for ratemaking as proposed by CalAm does not offer substantial benefits in the public interest.
20. Felton customers have not had an increase in their approved billed tariff rates since 1998.
21. Felton's rate shock problem has been caused in large part by long intervals between authorized increases.
22. It would be reasonable to implement the greater portion of Felton's suspended rates sooner rather than later.
23. Raising Felton's rates by 30% immediately as a first step toward full parity with Felton's Commission-approved revenue requirement would be reasonable and justified.