Assignment of Proceeding

John Bohn is the assigned Commissioner and Maribeth A. Bushey is the assigned ALJ in these proceedings.

Findings of Fact

1. In D.09-07-021, the Commission adopted an estimate to allocate general office costs to non-regulated operations but authorized Cal-Am to file a petition for modification to replace the estimate with the results of Cal-Am's multiple tier allocation methodology if Cal-Am provided the following:

a. Identification of all general office goods and services provided to non-regulated operations,

b. Identification of all personnel positions and assets included in revenue requirement and used to provide the non-regulated goods and services,

c. Statement of revenue received for such goods and services, and

d. Demonstration that all identifiable costs are direct billed to non-regulated accounts and that all indirect costs are allocated consistent with the multiple tier methodology.

2. On October 7, 2009, Cal-Am filed its Petition to Modify D.09-07-021 with three volumes of supporting testimony. The President of the American Water Works Service Company detailed the investigation and resulting corrections to non-regulated operations cost allocation. The Manager of Business Services for the Customer Service Center analyzed the share of time calls to the customer service center related to non-regulated contracts, and the Rate and Revenue Requirements Manager tabulated the changes to D.09-07-021 to implement the corrections and reverse the Commission's adopted estimate.

3. Cal-Am has demonstrated that replacing the Commission's adopted estimate for non-regulated general office cost allocation with the results of Cal-Am's multiple tier allocation methodology will increase the general office revenue requirement allocated to California by $820,786, and to the Monterey water district by $131,300 and the Monterey wastewater district by $11,100.

Conclusions of Law

1. Cal-Am has presented data and analysis showing that its multiple tier allocation methodology adequately allocates general office costs to non-regulated operations.

2. As provided in D.09-07-021, the Commission should authorize modifications to the revenue requirement adopted in that decision based on Cal-Am's presentation.

3. Cal-Am has justified revenue requirement increases to its Monterey water and wastewater districts, and the rate tables and tariff sheets attached to today's decision incorporate the increase.

4. Cal-Am's petition to modify should be granted.

5. Cal-Am should be authorized to file in accordance with General Order 96, and to make effective on not less than five days' notice, a Tier 1 advice letter with the revised tariff schedules for Monterey water and wastewater districts that are attached as appendices to this order. The revised tariff schedules shall apply to service rendered on and after their effective date.

ORDER

IT IS ORDERED that:

1. The Petition for Modification of Commission Decision 09-07-021 is granted.

2. California American Water Company is authorized to file a Tier 1 advice letter in accordance with General Order 96, and to make effective on not less than five days' notice, the revised tariff schedules for Monterey water and wastewater districts that are attached as appendices to this order. The revised tariff schedules shall apply to service rendered on and after their effective date.

3. In all future general office applications, California American Water Company shall include a comprehensive and detailed showing of non-regulated operations that in any way use assets or employees included in regulated revenue requirement. All contracts and accounting records related to such non-regulated operations are subject to discovery by the Division of Ratepayer Advocates and California American Water Company and its corporate affiliates using such assets or employees shall promptly produce all such documents upon request.

This order is effective today.

Dated June 3, 2010, at San Francisco, California.

D1006003 Appendices

Previous PageTop Of PageGo To First Page