Discussion

The original Rate Case Plan (D.04-06-018)¹ required Cal Am to file general rate cases each January, staggering the districts so that Cal Am filed a general rate case application for each of its districts every three years. In D.07-05-062, the Commission adopted a significantly revised Rate Case Plan. One of the revisions required that multi-district water utilities eventually file general rate cases for all districts at the same time every three years. The revised Rate Case Plan included a transition schedule that gradually aligned the staggered schedule into a new single-date filing schedule. Pursuant to the revised Rate Case Plan, Cal Am's first statewide, single-date general rate case was filed in July 2010, with an expected decision in December 2011. The anticipated December 2011 decision would adopt rates that become effective on January 1, 2012.

A.09-01-013, Cal Am's general rate case filing for the Larkfield, Los Angeles and Sacramento districts was Cal Am's final general rate case filing prior to transitioning all its districts to the single-date statewide general rate case filing schedule. The decision in A.09-01-013, D.10-06-038 was issued on June 29, 2010. D.10-06-038 should have aligned the effective dates of rates in the Larkfield, Los Angeles and Sacramento districts with the effective dates of rates in all Cal Am's other districts. D.10-06-038 was the final step in the transition that should allow the rates adopted in Cal Am's first statewide general rate case decision to become effective for all Cal Am districts on January 1, 2012.

Ordering Paragraph 4 in D.10-06-038 states:

For escalation years 2011 and 2012, California-American Water Company shall file Tier 2 advice letters in conformance with General Order 96-B proposing new revenue requirements and corresponding revised tariff schedules for each district and rate procedures set forth in the Commission's Rate Case Plan (Decision 07-05-062) for Class A Water Utilities and shall include appropriate supporting workpapers. The revised tariff schedules shall take effect no earlier than July 1, 2011 and July 1, 2012, respectively and shall apply to service rendered on and after their effective dates.

D.10-06-038 adopted test year rates that became effective on July 1, 2010 and as indicated above, escalation year rates that would become effective July 1, 2011 and July 1, 2012. The 2011 escalation year effective date is incorrect. The test year rates should have been effective July 1, 2010 through December 31, 2010, with the 2011 escalation year rates becoming effective January 1, 2011. The application did not seek 2012 escalation year rates, therefore, Ordering Paragraph 4 should not have included any reference to a 2012 escalation year effective date. Also, the Rate Case Plan and General Order 96-B allow Tier 1 Advice Letters for Escalation year filings rather than Tier 2. Rates for 2012 for all Cal Am districts will result from a decision in Cal Am's first statewide general rate case, A.10-07-007, which was filed July 1, 2010 and is ongoing.

The transition to single-date statewide general rate case filings and the resulting partial year rates created confusion. The mistakes in Ordering Paragraph 4 were not brought to the Commission's attention during the comment period for D.10-06-038 that would have allowed corrections to be made in a more timely manner. However, for the reasons stated above, Cal Am's Petition to Modify D.10-06-038 to allow 2011 escalation year rates to go into effect before July 1, 2011 and to eliminate the requirement for 2012 escalation rates should be granted. Cal Am may file the Escalation year rates as a Tier 1 Advice Letter.

¹ D.04-06-018 approved a Rate Case Plan schedule for all Class A water utilities.