STATE OF CALIFORNIA GRAY DAVIS, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
April 22, 2003 Agenda ID #2121
TO: PARTIES OF RECORD IN APPLICATION 02-05-033
This is the proposed decision of Administrative Law Judge (ALJ) Walker, previously designated as the principal hearing officer in this proceeding. It will not appear on the Commission's agenda for at least 30 days after the date it is mailed. This matter was categorized as ratesetting and is subject to Pub. Util. Code ยง 1701.3(c). Pursuant to Resolution ALJ-180 a Ratesetting Deliberative Meeting to consider this matter may be held upon the request of any Commissioner. If that occurs, the Commission will prepare and mail an agenda for the Ratesetting Deliberative Meeting 10 days before hand, and will advise the parties of this fact, and of the related ex parte communications prohibition period.
The Commission may act at the regular meeting, or it may postpone action until later. If action is postponed, the Commission will announce whether and when there will be a further prohibition on communications.
When the Commission acts on the proposed decision, it may adopt all or part of it as written, amend or modify it, or set it 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 as provided in Article 19 of the Commission's "Rules of Practice and Procedure." These rules are accessible on the Commission's website at http://www.cpuc.ca.gov. Pursuant to Rule 77.3 opening comments shall not exceed 15 pages. Finally, comments must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious method of service.
/s/ ANGELA K. MINKIN
Angela K. Minkin, Chief
Administrative Law Judge
ANG:tcg
ALJ/GEW/tcg DRAFT Agenda ID #2121
Ratesetting
Decision PROPOSED DECISION OF ALJ WALKER (Mailed 4/22/2003)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of Suburban Water Systems (U 339-W) for authority to increase rates: In 2003 $9,919,002, or 27.2% above the revenues generated by present rates, in 2004 $1,447,692 or 3.1% above the revenue generated by the rates proposed for 2003, in 2005 $1,597,008 or 3.3% above the 2004 revenue requirements. |
Application 02-05-033 (Filed May 13, 2002) |
Lenard G. Weiss, Attorney at Law, Lori Anne Dolqueist, Attorney at Law, and Robert L. Kelly, for Suburban Water Systems, applicant.
Charlyn Hook, Attorney at Law, and Ishwar C. Garg, for the Commission's Office of Ratepayer Advocates, protestant.
OPINION RESOLVING GENERAL RATE CASE
TABLE OF CONTENTS
Title Page
OPINION RESOLVING GENERAL RATE CASE 1
1. Summary 2
2. Background and Procedural History 2
3. Suburban's Application 3
4.1 General Rates in 2003, 2004 and 2005 5
4.2 Department of Health Services Fees 5
4.3 Tariff Related to Fire Flow Meters 6
4.4 Three Test Years 8
4.5 Memorandum Account for Security Costs 8
4.6 Amortization of Balancing Accounts 9
5. Summary of Earnings 9
6. Operating Revenues 9
6.1 Environmental Claims 9
6.2 Water Service Revenues 12
7. Operations and Maintenance Expenses 12
7.1 Payroll 12
7.2 Water Loss 13
7.3 Source of Supply 13
7.4 Water Treatment Expenses 13
7.5 Transmission and Distribution Expenses 14
7.6 Customer Account Expenses 14
7.7 Uncollectibles 14
8. Administrative and General Expenses 14
8.1 Payroll 14
a. District Manager 14
b. Corporate Counsel 15
c. Vice President of Quality Assurance 15
d. Regulatory Analyst 16
8.2 Pension and Benefits 16
8.3 Insurance 16
8.4 Water Conservation 17
8.5 Regulatory Commission Expenses 17
8.6 Extraordinary Legal Fees 18
8.7 BPOU Litigation 18
TABLE OF CONTENTS
(Continued)
Title Page
8.8 Office Supplies and Other Expenses 19
8.9 Miscellaneous General Expenses 19
8.10 Miscellaneous Expenses 19
9. Parent Company Allocation 19
10. Taxes 22
11. Purchase of Maple Water Company 22
12 Purchase of Maple Water Rights 25
12.1 Capital Expenditures 26
a. Plant 235 Booster Pump Station 26
b. PVC Pipe Additions 27
c. Transmission and Distribution Mains 27
d. Service Lines 27
e. New Well 28
12.2 Advice Letter Filings for Major Projects 28
13. Working Cash 29
14. Rate Design 29
14.1 Single District Rates 29
14.2 Low-Income Assistance 30
15. Rate of Return 31
15.1 ORA's Recommended Return on Equity 33
15.2 Suburban's Recommended Return on Equity 34
15.3 Return on Equity Discussion 35
15.4 Rate of Return 38
16. Comments on Proposed Decision 38
17. Assignment of Proceeding 38
Findings of Fact 39
Conclusions of Law 40
ORDER 41
OPINION RESOLVING GENERAL RATE CASE
1. Summary
Suburban Water Systems (Suburban) is authorized a $6,337,440 (17.32%) general rate increase for test year 2003, $788,300 (1.83%) for test year 2004, and $30,230 (0.07%) for attrition year 2005. We authorize rates of return on rate base of 9.10% in 2003, 8.98% in 2004, and 8.89% in 2005.
