1. Background
In Decision (D.) 08-02-036, the Commission authorized Suburban Water Systems (Suburban) and the other Class A water utilities to establish memorandum accounts to track the legal and related costs of participating in this proceeding.2 Authorization to establish the memorandum accounts was limited to the circumstances of this proceeding. Future requests for memorandum accounts to track costs associated with participating in generic proceedings were to be made by advice letter in accordance with General Order 96-B and the Water Industry rules, and the Division of Water and Audits would prepare a resolution for Commission consideration of the request unless the Commission had previously directed staff to deny or to approve the particular relief requested.3
Limited rehearing of D.08-02-036 was granted on the issue of memorandum account treatment for all Class A water utilities, other than Suburban, for the legal and related costs of participating in this proceeding from the date of issuance of this OII. Class A water utilities and other parties were directed to provide all documentation supporting their positions on extending or denying memorandum treatment to the other Class A water utilities.4 Parties submitted opening comments on July 27, 2009 and reply comments on August 17, 2009.
2 The memorandum account was limited to the legal and related costs of participating in this proceeding from the date of issuance of this Order Instituting Investigation (OII). Costs of preparing applications consolidated with this proceeding, whether incurred prior or subsequent to the issuance of the OII, were excluded from the authorized memorandum accounts as were the costs of customer notices. Suburban requested authorization of a memorandum account to track legal and related expenses in its application that was consolidated with this proceeding. DRA and Suburban concurred that prospective costs could be recovered and that the legal and regulatory expenses associated with participating in this proceeding qualified as an unanticipated expense. DRA opposed tracking expenses already incurred on the grounds that such recovery would be contrary to the principle against retroactive ratemaking. As noted in Suburban's comments on the proposed Phase 1A decision, CalAm filed an advice letter to establish a memorandum account to track the expenses associated with participating in this proceeding (CalAm's conservation rate applications were not consolidated with the OII), and the Division of Water and Audits rejected the advice letter.
3 D.09-06-053, Ordering Paragraph 3 (slip op.), modifying in part D.08-02-036.
4 D.09-06-053 at 8 (slip op.)
