5. Sales Per Customer

The settlement proposes SGV's estimated sales per customer.

5.1. Positions of Parties

COF does not oppose the residential sales per customer estimates adopted in the settlement, provided its recommendations regarding plant additions are adopted. Otherwise, it recommends that a five-year average be used.

The commercial sales per customer amount proposed in the settlement is based on a three-year average. COF recommends a five-year average consistent with the rate case plan.

COF does not oppose the small and large public authority sales per customer estimates used in the settlement.

COF states that the sales estimate adopted in the settlement assumed a 20% reduction of sales to CEMTEX based on a March 17, 2008 email from CEMTEX to SGV. COF points out that the email indicated sales would be reduced by 20% in 2008 compared to 2007 and then increase every year from 2009 through 2013. COF recommends that sales be increased to 226,308 hundred cubic feet (ccf) because it is more consistent with the CEMTEX email, although still lower, and reflects the three-year average sales for 2005 through 2007.

SGV estimates sales to California Steel Industries (CSI) at 20% below 2007 sales. COF recommends using the 2007 sales level of 89,621 ccf because SGV did not justify its estimate as used in the settlement.

FUSD agrees with the positions taken by COF.

SGV states that its use of a 20% reduction in sales to CSI is based on the economic slowdown in the building and manufacturing industries that use its steel products. For CEMTEX, SGV argues that its forecast is reasonable due to worsening economic conditions and the standstill in development.

5.2. Discussion

The effect of the economic slowdown is better reflected by using the three-year average commercial sales per customer amount proposed in the settlement than a five-year average. Thus, the settlement forecast is reasonable.

CEMTEX supplies sand, gravel and cement and CSI produces steel products. With the economic slowdown and reduction in construction, it is reasonable to expect that these customers will have less demand for their products resulting in lower water use. Thus, the settlement forecast usages for these customers are reasonable.

For the above reasons, the sales per customer forecasts included in the settlement are reasonable.