I. SETTLEMENT
1. The parties to this Settlement ("Parties") are the Water Branch of the Office of Ratepayer Advocates ("ORA") and Hillview Water Company, Inc. ("HWC").
2. The Parties agree that no signatory hereto nor any member of the staff of the Public Utilities Commission assumes any personal liability as a result of the Settlement. The Parties agree that no legal action may be brought in any state or federal court, or in any other forum, against any individual signatory representing the interests of either Party, ORA, or its attorneys, or the ORA itself regarding the Settlement. All rights and remedies are limited to those available before the California Public Utilities Commission ("Commission").
3. The Parties acknowledge that ORA is charged with representing the interests of customers of public utilities in the State of California, as required by Public Utilities Code Section 309.5, and nothing in the Settlement is intended to limit the ability of ORA to carry out that responsibility.
4. The Parties agree to support this Settlement inasmuch as their negotiations have resulted in the resolution of all issues raised in ORA's report, dated January 24, 2001, as it relates to the results of operation and the design of rates.
5. By this Settlement, the Parties agree that HWC's present rates are just and reasonable and should not now be changed since they would produce revenue equivalent to that required by the effect of the underlying stipulations.
6. Highlighted in the paragraphs that follow are various estimates used to derive the stipulated figures and other matters on which the Parties agree. Attached hereto as Appendix A is a Summary of Earnings and attached as Appendix B are the Recommended Quantities.
7. Consumption and Revenue The Parties agree to accept updated data showing 1,312 customers with a consumption of 221 hundred cubic feet per customer per year.
8. Purchased Water The Parties agree that HWC does not purchase water.
9. Purchased Power The Parties agree to use the latest information showing Purchased Power of $104,256 per year.
10. Other Expenses Related to Volume Based on recent invoices, the Parties agree that an estimate of $13,358 for Chemicals is reasonable.
11. Labor The Parties agree to an estimate of $86,050 for Labor for the reasons given in HWC's report.
12. Materials The Parties agree to an estimate of $15,000 for Materials for the reasons given in HWC's report.
13. Contractual Work The Parties agree to an estimate of $14,587 for Contractual Work for the reasons given in HWC's report.
14. Testing The Parties agree to an estimate of $17,853 for Testing for the reasons given in ORA's report.
15. Transportation The Parties agree to an estimate of $25,298 for Transportation for the reasons given in ORA's report.
16. Maintenance The Parties agree to an estimate of $5,835 for Maintenance for the reasons given in HWC's report.
17. Salaries-Office The Parties agree to an estimate of $76,877 for Salaries-Office for one office manager and two part-time clerks, based on mean hourly rates for these positions reported by the Office of Employment Services, Fresno and Madera Counties.
18. Salaries-Management After review of the required duties and additional requirements imposed by the Department of Health Services, the Parties agree that an estimate of $46,375 for Salaries-Management is reasonable.
19. Pensions and Benefits Based on a review of the Pensions and Benefits expense of each expense rather than the ratio of total payroll, the Parties agree to an estimate of $30,544 for Pensions and Benefits.
20. Uncollectibles Parties agree to use the Commission's standard methodology to calculate Uncollectibles by taking two tenths of one percent of gross revenues.
21. Services and Rents The Parties agree to an estimate of $2,740 for Services and Rents for the reasons given in HWC's report.
22. Supplies The Parties agree to an estimate of $53,184 for Supplies for the reasons given in HWC's report.
23. Professional Services Based on clarification that outside auditing is required by HWC's lender, the Parties agree to an estimate of $20,000 for Professional Services.
24. Insurance The Parties agree to an estimate of $17,835 for Insurance for the reasons given in HWC's report.
25. Regulatory Expense The Parties agree that expenses incurred in the present investigation are nonrecurring. As a result, the estimate for Regulatory Expense is $10,000 per year.
26. General Expenses The Parties agree to an estimate of $467 for General Expenses for the reasons given in HWC's report.
27. Depreciation-Expense The Parties agree to continue to use the depreciation rate of 3.25% that was used and adopted in Resolution W-3833.
28. Ad Valorem Taxes The Parties agree that Ad Valorem Taxes should be based on HWC's estimates. In addition, HWC agrees to pursue a reassessment of its property based on ORA's belief that the rate charged HWC by Madera County is higher than that charged for similar properties in other counties. Any resulting reduction, compared to the amount now adopted by the Commission, should be credited to HWC's Balancing Account.
29. Taxes on Payroll The Parties agree that the estimate of Taxes on Payroll should be $20,089, based on total payroll stipulated in this Settlement.
30. Taxes on Income The Parties agree that Taxes on Income should be based on the current rate of taxation.
31. Plant The Parties agree to an estimate of $4,694,850 for Plant for the reasons given in ORA's report.
32. Accumulated Depreciation The Parties agree to an estimate of $1,295,989 for Accumulated Depreciation for the reasons given in ORA's report.
33. Advances The Parties agree to an estimate of $164,606 for Advances for the reasons given in HWC's report.
34. Contributions The Parties agree to an estimate of $2,025,284 for Contributions because ORA incorrectly adjusted its estimates shown in its report by $189,577.
35. Deferred Taxes The Parties agree to an estimate of $83,917 for Deferred Taxes for the reasons given in HWC's report.
36. Deferred Investment Tax Credit The Parties agree to an estimate of $24,341 for Deferred Investment Tax Credit for the reasons given in HWC's report.
37. Working Cash The Parties agree to use the Commission's standard methodology to calculate Working Cash by taking one month of expenses (excluding taxes), depreciation, and uncollectibles.
38. Materials and Supplies The Parties agree on an estimate of $35,000 for the Materials and Supplies based on further review of HWC's records.
39. Rate of Return The Parties agree to 11.39% for Rate of Return, based on a Return on Equity of 12.75% and HWC's present amount and cost of debt.
40. Moratorium The Parties agree that the Commission should institute a moratorium on connections to HWC's Oakhurst-Sierra Lakes Service Area, except for any connection for which an application has now been made. When it obtains an adequate supply of water as determined by the Department of Health Services, HWC will file an Advice Letter with the Commission to rescind the moratorium.
41. Balancing Account The Parties agree that the Balancing Account, which totals an overcollection of $75,568 after applying the recovery of fees requested by Advice Letters 60, 63 and 65, should not be amortized at this time in view of increasing rates for electricity. HWC agrees to reexamine the overcollection and to file an advice letter to adjust rates by August 30, 2002, if it totals more than 2% of the operating revenue, or sooner, if the account is undercollected by that amount.
42. Facilities Fees The Parties agree that, consistent with Decision 91-04-068, HWC should be authorized to file an advice letter to implement Facilities Fees at the levels shown in Appendix B to ORA's report.
43. Miscellaneous Charges The Parties agree that, consistent with Resolution W-4035, HWC's Advice Letter 61, regarding charges for late payments, returned checks, and reconnections of service, should be approved.
HILLVIEW WATER COMPANY
By /s/ Roger L. Forrester
ROGER FORRESTER
President
P.O. Box 2269
Oakhurst, CA 93644
(559) 683-4322
Dated: April 16, 2001
WATER BRANCH OF THE OFFICE OF RATEPAYER ADVOCATES
By /s/ Daniel R. Paige
DANIEL R. PAIGE
Program Supervisor
320 West 4th Street, Suite 500
Los Angeles, CA 90013
(213) 576-7048
Dated: April 16, 2001
APPENDIX A Page 1 of 2 | |||||
Hillview Water Company | |||||
SUMMARY OF EARNINGS | |||||
|
|||||
HWC's Analysis at |
ORA's Analysis at |
||||
Present |
Requested |
Present |
Requested |
Settlement | |
Rates |
Rates |
Rates |
Rates |
Rates | |
OPERATING REVENUES |
|
|
|||
Metered |
$755,834 |
$855,074 |
$755,834 |
$855,074 |
$754,945 |
Flat Rate |
0 |
0 |
0 |
0 |
0 |
Private Fire Protection |
15,905 |
17,993 |
15,905 |
17,993 |
15,905 |
Other |
2,100 |
2,100 |
2,100 |
2,100 |
2,100 |
TOTAL REVENUE |
773,839 |
875,167 |
773,839 |
875,167 |
772,950 |
OPERATING EXPENSES |
|||||
Purchased Power |
96,586 |
96,586 |
104,256 |
104,256 |
104,256 |
Other Expenses Related to Volume |
13,358 |
13,358 |
10,155 |
10,155 |
13,358 |
Labor |
86,050 |
86,050 |
86,050 |
86,050 |
86,050 |
Materials |
15,000 |
15,000 |
15,000 |
15,000 |
15,000 |
Contractual Work-Others |
14,587 |
14,587 |
14,587 |
14,587 |
14,587 |
Testing Fees |
18,450 |
18,450 |
17,853 |
17,853 |
17,853 |
Transportation |
27,463 |
27,463 |
25,298 |
25,298 |
25,298 |
Other Maintenance |
5,835 |
5,835 |
5,835 |
5,835 |
5,835 |
Salaries-Office |
79,375 |
79,375 |
53,217 |
53,217 |
76,877 |
Salaries-Management |
46,375 |
46,375 |
35,735 |
35,735 |
46,375 |
Pensions & Benefits |
30,544 |
30,544 |
26,082 |
26,082 |
30,544 |
Uncollectibles |
1,543 |
1,543 |
1,548 |
1,750 |
1,546 |
Services & Rents |
2,740 |
2,740 |
2,740 |
2,740 |
2,740 |
Supplies & Rents |
53,184 |
53,184 |
53,184 |
53,184 |
53,184 |
Professional Services |
41,000 |
41,000 |
11,844 |
11,844 |
20,000 |
Insurance |
17,835 |
17,835 |
17,835 |
17,835 |
17,835 |
Regulatory Expense |
27,613 |
27,613 |
5,583 |
5,583 |
10,000 |
General Expense |
467 |
467 |
467 |
467 |
467 |
Subtotal |
578,005 |
578,005 |
487,269 |
487,472 |
541,805 |
(Continued)
Appendix A
Page 2 of 2
Hillview Water Company
Summary of Earnings
(a) HWC's Analysis at |
ORA's Analysis at |
|||
Present |
Requested |
Present |
Requested |
Settlement |
Rates Rates Rates Rates Rates
Depreciation-Expense |
61,112 |
61,112 |
54,232 |
54,232 |
54,232 |
Ad Valorem Taxes |
18,675 |
18,675 |
10,057 |
10,057 |
18,675 |
Taxes on Payroll |
20,462 |
20,452 |
12,309 |
12,309 |
20,089 |
Taxes on Income |
800 |
16,856 |
17,564 |
82,234 |
3,674 |
TOTAL DEDUCTIONS |
679,054 |
695,100 |
583,240 |
646,452 |
638,475 |
NET REVENUE |
94,785 |
180,067 |
192,407 |
228,863 |
134,475 |
Average Plant |
4,771,440 |
4,771,440 |
4,694,850 |
4,694,850 |
4,694,850 |
Average Accum. Depreciation |
1,386,575 |
1,386,575 |
1,295,989 |
1,295,989 |
1,295,989 |
Net Plant |
3,384,865 |
3,384,865 |
3,398,861 |
3,398,861 |
3,398,861 |
Less: Advances |
164,607 |
164,607 |
164,606 |
164,606 |
164,606 |
Contributions |
1,828,205 |
1,828,205 |
2,214,861 |
2,214,861 |
2,025,284 |
Deferred Taxes |
83,917 |
83,917 |
83,917 |
83,917 |
83,917 |
Deferred ITC |
24,341 |
24,341 |
24,341 |
24,341 |
24,341 |
Plus: Working Cash |
48,167 |
48,167 |
40,588 |
40,588 |
45,150 |
Materials & Supplies |
51,500 |
51,500 |
10,700 |
10,700 |
35,000 |
Ratebase |
1,383,462 |
1,383,462 |
962,425 |
962,425 |
1,180,864 |
Rate of Return |
6.85% |
13.02% |
19.99% |
23.78% |
11.39% |
(End of Appendix A)
APPENDIX B
Hillview Water Company
RECOMMENDED QUANTITIES
Expenses
1. Purchased Power:
Pacific Gas and Electric Company
Tariff A-1, A-6, A-10, and E-19
kWhr Used 1,039,037 per year
Total Charge $104,256 per year
Average Cost per kWhr. $0.1003
3. Ad Valorem Taxes
Rate 1.06%
Total Charge $18,675 per year
4. Connections
Metered Customers:
5/8 x 3/4 inch meter 0
3/4 inch meter 1,186.5
1 inch meter 52
1 1/2 inch meter 34
2 inch meter 35.5
3 inch meter 3
6 inch meter 1
Total: 1,312
Fire Service:
6-inch connection 13
Private Hydrants:
6-inch connection 81
Metered Consumption 289,952 Ccf per year
(End of Appendix-B)
