Conclusions of Law
1. The adopted summaries of earnings presented in Appendix A, and the quantities and calculations included as Appendix D that underlie them, are reasonable for ratemaking purposes and should be adopted.
2. A change in the FMCT tariff is not warranted on this record.
3. Suburban should be authorized to establish a memorandum account to track costs associated with federal and state legislation requiring security measures to prevent acts of terrorism.
4. Suburban should not be required to establish a balancing account or memorandum account for CR reimbursements, but it should be required to prepare a pro forma exhibit showing contamination costs and reimbursements if so requested by ORA.
5. Suburban's request for three test years in this General Rate Case should be denied.
6. A minimum fine of $500 for each of two infractions should be assessed with respect to the acquisition of Maple Water Company.
7. The revised rates and step increases set forth in Appendix B are justified.
8. Suburban should be authorized to implement the rate changes set forth in this order.
9. This decision should be made effective immediately to allow Suburban opportunity to earn the return found reasonable for it in test year 2003.
IT IS ORDERED that:
1. Suburban Water Systems (Suburban) is authorized to file in accordance with General Order 96, and make effective on not less than five days' notice, the revised tariff schedules for 2003 included as Appendix B to this order. The revised tariff schedules shall apply to service rendered on and after their effective date.
2. Advice letters for authorized rate increases for 2004 and 2005 may be filed in accordance with General Order 96-A no earlier than November 1 of the preceding year. The filing shall include appropriate work papers. The increase shall be the amount authorized herein, or a proportionate lesser increase if Applicant's rate of return on rate base, adjusted to reflect rates then in effect, normal ratemaking adjustments, and the adopted change to this pro forma test, for the 12 months ending September 30 of the preceding year, exceeds the lower of (a) the rate of return on rate base found reasonable by the Commission for Applicant for the preceding year in the then most recent rate decision, or (b) the return on rate base authorized herein for the preceding year. The advice letters shall be reviewed by the Commission's Water Division for conformity with this decision, and shall go into effect upon Water Division's determination of compliance, not earlier than January 1 of the year for which the increase is authorized, or 30 days after filing, whichever is later. The tariffs shall be applicable to service rendered on or after the effective date. The Water Division shall inform the Commission if it finds the proposed increase does not comply with this decision or other Commission requirements.
3. Suburban is authorized to file advice letters seeking Commission authorization for rate offsets for the following capital projects when each has been completed and placed in service, with costs not to exceed those indicated:
· San Jose Hills Service Area. Replacement of existing 2-million gallon concrete tank at Plant 121 at a cost of $1,352,000.
· Whittier/La Mirada Service Area. Replacement of the existing pump station at Plant 235 at a cost of $1,045,000.
· Plant 410. Construction of an iron and manganese removal treatment facility at a cost of $1,400,000.
· Plant 235. Replacement of an existing steel tank at a cost of $1,014,000.
The advice letters shall be effective on filing. If the Water Division finds that the proposed rate offsets do not conform with this order, the Water Division shall prepare a Resolution that adjusts the rates as of the effective date.
4. Suburban is authorized to establish a memorandum account to track costs associated with any federal or state legislation requiring security measures to prevent acts of terrorism.
5. Suburban is authorized to include in rates the requested value of acquired Maple Water Company (Maple) assets.
6. Suburban shall within 60 days pay a fine of $1,000 for two filing infractions involved in its acquisition of Maple; the fine shall be payable to the state's General Fund.
7. In the future, upon request of the Office of Ratepayer Advocates, Suburban shall prepare a pro forma exhibit showing all reimbursements by Cooperating Respondents and the contamination costs for which reimbursement has been made.
8. The summaries of earnings presented in Appendix A, and the quantities and calculations included as Appendix D which underlie them, are adopted.
9. Suburban's requests in Application (A.) 02-05-033 are granted as set forth above, and in all other respects are denied.
10. A.02-05-033 is closed.
This order is effective today.
Dated ____________________, at San Francisco, California.
