6. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Separate opening comments were filed by San Gabriel and DRA on January 21, 2010, and by CFC on January 22, 2010. Separate reply comments were filed by San Gabriel, DRA and CFC on January 26, 2010. San Gabriel and DRA took the common position that the specific quantity rates set out in the proposed decision, and based on already-outdated revenue requirements, ought to be supplanted by a 9-step methodology that would allow rates based on then-current revenue requirements to be set via advice letter. The decision has been revised accordingly, with a nine-step procedural methodology (Figure 1) added to the body of the decision and set out in the Attachment, and illustrative examples of specific quantity rates and service charges placed in Table A and Table B, respectively, of the Attachment.

DRA argued that the data showing recent reductions in water usage were not provable by customer class and argued that those data reflected customer reclassifications only, preventing any sound judgment as to San Gabriel's progress in meeting the Commission's goal regarding residential water conservation. DRA similarly contended that the reported system-wide reductions in water production could not be directly translated into conclusions about reductions in residential use. San Gabriel interpreted the reclassification and production data in the record differently, supporting the relevant portions of the proposed decision. The decision has been revised to indicate that it is unclear how much, if any, of the usage reductions were attributable to the reclassification of large-use customers from the residential class to the non-residential class.

San Gabriel complained that the conclusion of law (No. 5) referring to shareholder risk relative to ratepayer risk had no predicate in the record. That complaint being meritorious, the conclusion was removed.

San Gabriel realleged in its comments that the denial of its memorandum account motion is discriminatory and unfair. Its arguments were fully considered in the proposed decision and this decision denies the motion as well, although we modify the discussion somewhat.

In its comments CFC repeated its arguments that there ought to be predicate cost-of-service studies for each customer class and that setting conservation rates for only one class of customers is unlawfully discriminatory. We find nothing in CFC's comments that warrant a change of position from the proposed decision.