A0807009 O'Donnell Comment Dec. Adopting Test Year 2009/10 Revenue Requirement and Rates for the Fontana Water Company Division of San Gabriel Valley Water Company

24. Reasonableness Review-Job No. 4982-Cherry Avenue South of Foothill Boulevard-Install 24-Inch and 16-Inch Pipelines

SGV installed 137 feet of 42-inch pipe, 1,582 feet of 24-inch pipe, and 1,235 feet of 16 inch pipe. The project was placed in service in October 2007 at a recorded cost of $762,638.

24.1. Positions of Parties

COF represents the pipeline was intended to transport water from Plant F7. COF states the fact that the pipeline was not included in the April 2005 Master Plan indicates the existing system is capable of producing the desired pressure during the next five years and available fire flows are adequate for residential purposes and most commercial/industrial purposes without the project. COF recommends this project be disallowed or the amount allowed reduced.

FUSD agrees with the position taken by COF.

SGV states the existing pipeline did not have sufficient capacity to transport the full production from Plant F7. SGV states that the existing facilities were installed in 1926, 1952, 1953 and 1968. SGV also represents the new pipeline is needed to transport water from sources other than Plant F7 when the wells and booster pumps at Plant F7 are not available. Additionally, since San Bernardino County planned to reconstruct Cherry Avenue at that time, SGV avoided the cost of removing and replacing new or near new pavement that would have been incurred if SGV deferred the project.

24.2. Discussion

The age of the existing facilities indicates that they were nearing the end of their useful lives of about 50 years. In addition, such older pipelines would be more susceptible to damage due to the reconstruction of the road over the pipelines by San Bernardino County. The fact that San Bernardino County planned to reconstruct Cherry Avenue at that time provided the opportunity for cost savings.

The existing pipeline did not have sufficient capacity to transport the full production from Plant F7. The additional capacity of the new facilities allows SGV to transport the full capacity of Plant F7, as well as water from sources other than Plant F7 when Plant F7 is not available. For these reasons, the project is reasonable.