11. Assignment of Proceeding
Catherine J.K. Sandoval is the assigned Commissioner and Jessica T. Hecht is the assigned ALJ in this proceeding.
1. The San Gabriel Valley Water Company and DRA served a Settlement Agreement resolving most aspects of this proceeding on January 27, 2011.
2. San Gabriel and DRA are the only parties to the Settlement Agreement.
3. No parties oppose the settlement agreement.
4. The settlement agreement results in a Test Year 2011-2012 revenue requirement for the San Gabriel Los Angeles District of over $63 million.
5. The settlement agreement would allow a capital budget of $48,936,000 for San Gabriel's Los Angeles District during the term of this GRC, with $39,908,000 included in rate base on a forecasted basis, and up to $9,028,000 to be added by advice letter on a recorded basis after the projects are completed, used and useful, and placed into service.
6. DRA and San Gabriel recommend a specific rate adjustment of $0.0455/Ccf to the Fontana Division rate to recover the Fontana Division's portion of the General Division expenses contained in the settlement.
7. The settlement agreement defers most capital requests related to San Gabriel's General Division to the next San Gabriel Fontana Division Rate Case.
8. A two-way balancing account passes increased or decreased costs directly to ratepayers if the Commission finds that those costs were incurred reasonably.
9. San Gabriel has some control over the costs of its employees' health and dental insurance premiums.
10. To the extent possible, all costs related to water quality contamination and related litigation should be borne by polluters.
11. San Gabriel did not request sharing of the credit balance in its WQLMA in this GRC, and such a determination is not within the scope of this proceeding.
12. Outside legal expense costs incurred to protect San Gabriel's rights under the BPOU Project Agreement, a contract between San Gabriel and other parties to settle contamination claims, are contamination-related expenses in that they are a direct result of and would not have been incurred in the absence of contamination.
13. Including contamination-related costs in the WQLMA ensures that ratepayers do not pay costs that may be recovered from polluters.
14. San Gabriel requested and received authority to collect interim rates beginning on July 1, 2011, the first day of its new test year.
15. San Gabriel is tracking the difference between interim rates and the rates adopted for Test Year 2011-2012 in its Interim Rates Memorandum Account.
1. Rule 12.1(d) provides that the Commission will not approve settlements, whether contested or uncontested, unless the settlement is reasonable in light of the whole record, consistent with law, and in the public interest.
2. The settlement agreement is reasonable in light of the whole record, consistent with the law, and in the public interest.
3. It is reasonable to maintain the current funding mechanism for health and dental insurance costs, to ensure that San Gabriel has incentives to manage health and dental expenses in a cost-effective manner.
4. It is reasonable to require that contamination-related costs are collected from polluters to the extent possible.
5. It is reasonable for predictable, ongoing expenses to be collected as part of San Gabriel's revenue requirement.
6. It would not be reasonable to collect from ratepayers any costs recorded in San Gabriel's WQLMA when that account holds a credit balance.
7. It is reasonable to allow San Gabriel to amortize in rates, and collect from (or refund to) customers, the difference between its authorized interim rates tracked in its Interim Rate Memorandum Account and the rates adopted in this decision for Test Year 2011-2012.
IT IS ORDERED that:
1. The joint motion of San Gabriel Valley Water Company and the Division of Ratepayer Advocates to approve the settlement found at Appendix E is granted, as set forth in this Order.
2. The revenue requirement for the San Gabriel Valley Water Los Angeles District in Test Year 2011-2012 is $63,973,500, as shown in Appendix A.
3. San Gabriel Valley Water Company (San Gabriel) is authorized a capital budget of $48,936,000 for its Los Angeles District during the term of this general rate case. Of this total, $39,908,000 shall be included in ratebase on a forecasted basis, and up to $9,028,000 may be added by advice letter on a recorded basis after the projects are completed and placed into service.
4. A specific rate adjustment of $0.0455 per hundred cubic feet is adopted for San Gabriel Valley Water Company's Fontana Division to recover that division's portion of the General Division expenses contained in the settlement.
5. Capital requests related to the Fontana Office Complex are deferred to the next San Gabriel Valley Water Company Fontana District general rate case.
6. San Gabriel Valley Water Company may request the addition to ratebase of seven capital projects identified in this decision, upon completion of those projects, a showing the projects are used and useful, and their entry into service, through not more than two Tier 2 advice letters per fiscal year (July 1 - June 30). Each advice letter may contain costs related to more than one project, and shall be served on the most recent service list for this proceeding as well as the service list required under Commission General Order 96-B.
7. The request of San Gabriel Valley Water Company to create a balancing account for employee health and dental insurance premiums is denied.
8. The request of San Gabriel Valley Water Company to amortize in rates the costs currently included in its Water Quality Litigation Memorandum Account is denied.
9. The cost of outside legal services shall be recorded in the San Gabriel Valley Water Company Water Quality Litigation Memorandum Account; the request to include such costs in the company's test year revenue requirement is denied.
10. San Gabriel Valley Water Company is authorized to file by Tier 1 advice letter the revised tariff schedules attached to this order as Appendices A, B, C, and D, and to concurrently cancel its present schedules for such service. This filing shall be subject to approval by the Commission's Division of Water and Audits. The effective date of the revised schedule shall be five days after the effective date of this decision.
11. For escalation years 2012-2013 and 2013-2014, San Gabriel Valley Water Company shall file Tier 2 advice letters in conformance with General Order 96-B on or before May 16, 2012 and May 16, 2013 proposing new revenue requirements and corresponding revised tariff schedules, as set forth in the Commission's Rate Case Plan (Decision 07-05-062) for Class A Water Utilities. These advice letters shall include appropriate supporting workpapers. The revised tariff schedules shall take effect no earlier than July 1, 2012 and July 1, 2013, respectively, and shall apply to service rendered on and after their effective dates. The proposed revised revenue requirements and rates shall be reviewed by the Commission's Division of Water and Audits. The Division of Water and Audits shall inform the Commission if it finds that the revised rates do not conform to the Rate Case Plan, this order, or other Commission decisions, and if so, shall reject the filing.
12. San Gabriel shall file a Tier 2 advice letter within 10 days of the effective date of this decision to amortize in rates, and collect from (or refund to) customers, the difference between its authorized interim rates tracked in its Interim Rate Memorandum Account and the rates adopted in this decision for Test Year 2011-2012.
13. Application 10-07-019 is closed.
This order is effective today.
Dated November 10, 2011, at San Francisco, California.
MICHAEL R. PEEVEY
President
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
MARK J. FERRON
Commissioners
APPENDIX F
(List of Appearances)
************** PARTIES **************
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