14. Plant F21

SGV initially proposed to acquire land adjacent to the Plant F21 site and construct a 1.5 million gallon reservoir, a replacement well with chlorine treatment, an additional well with chlorine treatment, a complete booster pump station with control equipment and site fencing.

The proposed expenditures are $700,000 in 2008, $0 in 2009, $2,885,000 in 2010, and $605,000 in 2011.

SGV proposes advice letter treatment for this project.

The settlement amount excludes the additional well (($605,000) that will not be constructed in this GRC cycle, but retains the rest of the expenditures proposed by SGV.

14.1. Positions of Parties

Prior to the settlement, DRA agreed with the proposed expenditures with the exception of the additional well, which it opposed.

COF states the storage and pumping facilities allowed in the settlement were not reduced due to the removal of the additional well initially proposed. COF recommends that storage and pumping facilities be reduced due to the removal of the additional well. Thus, COF recommends that only $3,000,000 be allowed.

FUSD does not object to the replacement well. FUSD states that the existing well pumps directly into the distribution system and the Juniper Pressure Zone, in which Plant F21 is located, has surplus reservoir capacity. FUSD also states that the primary purpose of the proposed additions is to serve future growth. For these reasons, FUSD argues that the additional facilities are not needed.

SGV states the reservoir is necessary to allow minimum disinfection contact time before the water enters the distribution system, and the booster pump is necessary to pump water from the reservoir into the distribution system.

SGV states that the additional well is necessary to meet current and future demand.

14.2. Discussion

The issue between the parties is whether the reservoir and booster pump station should be reduced in size because the additional well was deferred in the settlement. The additional well was deferred to the next GRC, not eliminated entirely. If the new reservoir and booster pump station are sized for only the one well, another reservoir or expansion of the planned reservoir will be necessary along with more booster pump capacity when the additional well is drilled. Although the need for the now deferred well is not addressed in this proceeding, it is reasonable to conclude that one will eventually be needed. Storage and pumping capacity have service lives far beyond this GRC cycle. Their design must consider the long term rather than just this GRC cycle. It is reasonable to construct the additional storage and pumping capacity as provided for in the settlement. The settlement provisions regarding Plant F21 are reasonable.

The settlement provides for advice letter treatment of this project. The ratebase offset advice letter to be filed in accordance with the settlement should be filed only after the project is completed, used and useful. The settlement, without this alternative term, is not in the public interest.