STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
March 25, 2008 Agenda ID #7502
and
Alternate Agenda ID #7503
Ratesetting
TO PARTIES OF RECORD IN APPLICATION 07-01-03 et al.
Enclosed are the proposed decision of Administrative Law Judge (ALJ) Rochester previously designated as the presiding officer in this proceeding and the alternate proposed decision of Commissioner Bohn. The proposed decision and the alternate decision will not appear on the Commission's agenda for at least 30 days after the date it is mailed.
Pub. Util. Code § 311(e) requires that the alternate item be accompanied by a digest that clearly explains the substantive revisions to the proposed decision. The digest of the alternate proposed decision is attached.
This matter was categorized as ratesetting and is subject to Pub. Util. Code § 1701.3(c). Upon the request of any Commissioner, a Ratesetting Deliberative Meeting (RDM) may be held. If that occurs, the Commission will prepare and publish an agenda for the RDM 10 days beforehand. When an RDM is held, there is a related ex parte communications prohibition period. (See Rule 8.2(c)(4).)
When the Commission acts on these agenda items, it may adopt all or part of the decision as written, amend or modify them, or set them aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.
Parties to the proceeding may file comments on the proposed decision and alternate proposed decision as provided in Pub. Util. Code §§ 311(d) and 311(e) and in Article 14 of the Commission's Rules of Practice and Procedure (Rules), accessible on the Commission's website at www.cpuc.ca.gov. Pursuant to Rule 14.3, opening comments shall not exceed 15 pages.
Comments must be filed either electronically pursuant to Resolution ALJ-188 or with the Commission's Docket Office. Comments should be served on parties to this proceeding in accordance with Rules 1.9 and 1.10. Electronic and hard copies of comments should be sent to ALJ Rochester at lrr@cpuc.ca.gov and Commissioner Bohn's advisor Laura Krannawitter, at llk@cpuc.ca.gov. The current service list for this proceeding is available on the Commission's website at www.cpuc.ca.gov.
/s/ ANGELA K. MINKIN
Angela K. Minkin, Chief
Administrative Law Judge
Attachment
ATTACHMENT
Digest Explaining Substantive Differences from Proposed Decision:
Issue: Proposed Consolidation of Larkfield and Sacramento Districts -
Proposed Decision: Does not adopt the Application's proposed consolidation plan, however, it adopts an alternate consolidation plan. The alternate plan requires Sacramento District customers to provide a $.65 per month subsidy to Larkfield. Although the subsidy decreases the Larkfield District monthly rate increase by $16.40, Larkfield District customers' monthly bills will still increase by $9.75. The Sacramento subsidy will continue for 2009 and 2010, although the Larkfield District will fully absorb the increases adopted for 2009 and 2010.
Alternate Proposed Decision: Does not adopt any consolidation plan for the Larkfield and Sacramento districts.
(END OF ATTACHMENT)
COM/JB2/hl2 ALTERNATE DRAFT Agenda ID #7503
ALTERNATE TO AGENDA ID #7502
Ratesetting
Decision ALTERNATE PROPOSED DECISION OF COMMISSIONER BOHN (Mailed 3/25/2008)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of California-American Water Company (U 210 W), to Decrease Revenues for Water Service in its Coronado District By ($73,100) or (0.46%) in 2008 and Increase Revenues by $266,200 or 1.67% in 2009 and $260,900 or 1.61% in 2010. |
Application 07-01-036 (Filed January 22, 2007) |
And Related Matters. |
Application 07-01-037 Application 07-01-038 Application 07-01-039 |
(See Attachment C for a List of Appearances)
OPINION ADOPTING THE REVENUE REQUIREMENT FOR
CALIFORNIA-AMERICAN WATER COMPANY'S LARKFIELD AND SACRAMENTO DISTRICTS
TABLE OF CONTENTS
Title Page
ALTERNATE OPINION ADOPTING THE REVENUE REQUIREMENT FOR CALIFORNIA-AMERICAN WATER COMPANY'S LARKFIELD AND SACRAMENTO DISTRICTS 22
3. Settlement Agreement Between Cal Am and DRA 66
3.1. Mark West Comments on the Settlement Agreement 77
3.2 Terms of the Settlement 99
3.2.2. Customer Sales and Revenue 1010
3.2.3. Operation and Maintenance Expense 1111
3.2.3.1 Sacramento District Pumping Expense -
Miscellaneous 1111
3.2.3.2 Sacramento District Water Treatment - Miscellaneous 1111
3.2.4. Administrative and General Expenses 1111
3.2.5. Utility Plant in Service 1212
3.3 Cal Am's and DRA's Motion to Adopt the Settlement 1616
4. Issues Not included in the Settlement 1717
4.2. Infrastructure Replacement System Surcharge 2424
4.3. Larkfield and Sacramento District Consolidation 3232
TABLE OF CONTENTS
(cont'd)
Title Page
ATTACHMENT A: Settlement Agreement - Larkfield District
Settlement Agreement - Sacramento District
ATTACHMENT B: Comparison Tables
ALTERNATE OPINION ADOPTING THE REVENUE REQUIREMENT FOR
CALIFORNIA-AMERICAN WATER COMPANY'S LARKFIELD AND SACRAMENTO DISTRICTS
1. Summary
This decision resolves the revenue requirement phase of the general rate case (GRC) application of California-American Water Company (Cal Am) for its Larkfield (A.07-01-037) and Sacramento (A.07-01-038) districts. A separate decision was issued for the Coronado and Village districts. We adopt a 2008 revenue increase for Larkfield of $753,200 or 36.66%, which is effective from January 1, 2008. We adopt a 2008 revenue increase for Sacramento of $6,804,300 or 25.71%, which is effective from January 1, 2008. The rate design portion of this case will be decided in Phase II.
Today's decision adopts the settlement between Cal Am and the Division of Ratepayer Advocates (DRA). We find the settlement is reasonable in light of the whole record, consistent with law and in the public interest.
We adopt a return on equity (ROE) of 10.15% for Cal Am's Larkfield and Sacramento districts for the three-year GRC period, or until the next GRC or Cost of Capital decision for a particular district is issued.1
We do not grant Cal Am's request for an Infrastructure System Replacement Surcharge (ISRS). Cal Am must first develop a comprehensive asset management plan, as described in the Water Action Plan, identifying the specific areas requiring capital investment to replace or improve aging infrastructure before we will implement a surcharge.
We do not implement the pilot Distribution System Improvement Charge (DSIC)2 program developed in D.07-08-030 for the Cal Am Los Angeles District GRC. If successful, we envision the Los Angeles pilot program serving as a model for other Cal Am districts and Class A water utilities. We encourage Cal Am to take the necessary steps outlined here to implement an asset management plan and apply for a DSIC in its next GRC.
We do not adopt the Cal Am consolidation proposal. While the Water Action Plan opened the door for a renewed consideration of subsidies, it did so along with a multitude of other policy objectives to be balanced. We have not been presented with a record in this proceeding that would weigh the need to mitigate rates for a low density community heavier than the need to charge cost-based rates.
Finally, this decision approves Cal Am's requested regulatory expenses and employee pensions and benefits expenses.
1 Cal Am is schedule to file the next GRC for Larkfield and Sacramento in 2008, according to the new Rate Case Plan adopted in Decision (D.) 07-05-062.
2 The ISRS and DSIC are different names for similar infrastructure improvement funding mechanisms.
