16. Mains-Account 343

SGV plans to construct or replace water mains.

The expenditures initially proposed in the application were $2,770,000 for 2008, $3,400,000 for 2009, $4,900,000 for 2010 and $3,000,000 for 2011.

The settlement proposes to reduce expenditures by $2,000,000 in 2009 and $2,000,000 in 2010.

16.1. Positions of Parties

Prior to the settlement, DRA supported SGV's proposal.

DRA supports the settlement amount, which is $2,000,000 less in 2009 and $2,000,000 less in 2010 than SGV requested, because the main from plant F53 to Plant F19 will not be built since the reservoir and booster pump station at Plant F53 will not be constructed during this GRC cycle.

SGV's application included construction of a water treatment plant at Plant F25. In the settlement, construction at Plant F25 was excluded. COF states that, since the settlement amount includes $1,000,000 for a main to convey contaminated water to Plant F25 for treatment, that amount should be excluded.

COF states that main replacements related to Sandhill should not be built. COF also states that other replacements are not needed because the Master Plan does not indicate system deficiencies. COF agrees that old leaky mains should be replaced. As a result, COF recommends no replacement of mains until 2011.

FUSD agrees with the positions taken by COF. In addition, FUSD states that for each year from 2008 through 2011, SGV describes its mains expenditure as "Miscellaneous." However, for 2011, SGV has an additional mains expenditure identified as $2,000,000 for "Various Locations." FUSD argues that this is merely an attempt to pad the expenditures and should be eliminated.

SGV argues that some of the mains have exceeded their useful lives and need to be replaced. It states that other mains may be too small to supply current demands, including fire flow requirements. SGV also states that changes in the location of water supplies and demand may require main replacement. Additionally, SGV tries to coordinate main replacement with city or county street construction to reduce the cost of replacement. SGV also argues that although some of the mains carry Sandhill water, they also carry water from other sources.

16.2. Discussion

SGV's application included construction of a water treatment plant at Plant F25. In the settlement, construction at Plant F25 was excluded. Since the settlement amount includes $1,000,000 for a main to convey contaminated water to Plant F25 for treatment, that amount should be excluded from the expenditures for mains in 2011.

Since the settlement amount for 2011 does not contain an extra $2,000,000 for "various" mains, FUSD's concerns regarding this matter have been addressed.

Replacement of mains that have exceeded their useful lives or are under sized is reasonable. It is also reasonable to take advantage of opportunities presented by local government reconstructing roads, etc. to reduce costs. The settlement amount is in line with recent recorded amounts. The settlement amount is reasonable with the above $1,000,000 reduction for 2011. The settlement, without this alternative term, is not in the public interest.