6. Summary of Settlement Terms
Under the terms of the proposed settlement Golden State will apportion $9.5 million in refunds4 an amortization period of between 12 and 36 months, depending on the ratemaking area to the seven Region 1 ratemaking areas, and to Regions 2 and 3, as follows:
Golden State Ratemaking Service Areas Refunds over 12 - 36 Months | |
1. Arden-Cordova |
$ 3,578,522 |
2. Bay Point |
$ 1,556,435 |
3. Clearlake |
$ 1,437,211 |
4. Los Osos |
$ 33,983 |
5. Ojai |
$ 986,463 |
6. Santa Maria |
$ 192,566 |
7. Simi Valley |
$ 993,167 |
8. Region 2 |
$322,325 |
$ 399,328 | |
Total |
$9,500,000 |
Additionally, Golden State will reduce the rate base by $2.5 million, which will result in lower rates.5 Golden State will reduce rate base in its ratemaking areas as follows:
Golden State Ratemaking Service Areas Rate Base Reductions | |
1. Arden-Cordova |
$ 1,241,460 |
2. Bay Point |
$ 299,587 |
3. Clearlake |
$ 266,684 |
4. Los Osos |
$ 17,841 |
5. Ojai |
$ 250,651 |
6. Santa Maria |
$ 98,265 |
7. Simi Valley |
$ 267,457 |
8. Region 3 |
$ 58,055 |
Total |
$2,500,000 |
Finally, Golden State will reduce the balance in its existing Arden-Cordova Memorandum Account by $500,000, and proportionately reduce the surcharge used to collect the account's remaining balance.6 The effect of these three adjustments is that the ratepayers see a permanent reduction in the total revenue requirement collected by Golden State.
The proposed settlement agreement also provides that Golden State will pay the State of California a penalty of $1,000,000 to the State's general fund, consistent with the requirements for any other fine or penalty imposed by the Commission on a regulated public utility.7
In addition to the revenue requirement and rate base reductions, and the fine, the settlement provides that Water & Audits will engage an independent auditor to examine the operations of the company.8 Section 7.5 of the Settlement provides that, for each separate and independent audit, Golden State agrees to pay all costs of the independent auditor and not seek recovery of this expense from its customers at any time. Golden State will be subject to three separate independent audits over a ten-year period from the date of approval of the proposed settlement of its procurement practices for engineering or construction for any and all capital projects starting in 1994.9 These audits will examine Golden State's compliance with Commission and in-house Golden State policies and procedures for the procurement of outside engineering or construction contracts for capital projects in Golden State's Region 1, Region 2, Region 3, and General Office.
Golden State also agrees that it will not include any legal, investigation costs, or other expenses incurred in connection with its Richardson Engineering Company investigation and with Water & Audits' investigation, in any historical expense figures used to forecast Golden State's expenses for any future rates. It also agrees to identify separately any and all litigation costs, investigation costs, and other expenses incurred in connection with any civil litigation arising out of or related to the Richardson Engineering Company investigation prior to the date of the settlement that are included in any historical expenses used to determined expenses in any future filings, including, but not limited to, general rate cases, including General Office costs, and advice letter filings.
(Settlement § 6.5.)
We find the terms of the settlement to be in the public interest because they result in substantial refunds, a fine, and resolve serious allegations of
wrong-doing by Golden State. (Rule 12. 1(d).)
4 Settlement § 6.1.A.
5 Settlement § 6.2.
6 Settlement § 6.3.
7 Settlement § 6.4.
8 See Settlement § 7.3.
9 There are various other exclusions and descriptions of these audits included in the settlement: this is only a summary and not all-inclusive.
