ALJ/BDP/sid DRAFT CA-5

1/4/2001

Decision PROPOSED DECISION OF ALJ PATRICK (Mailed 12/5/2000)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SAN JOSE WATER COMPANY (U-168-W), a corporation, for an order authorizing it to increase rates charged for water service.

Application 00-02-035 (Filed February 18, 2000)

Steefel, Levitt & Weiss, by Lenard G. Weiss and Anne

Marie Murphy, Attorneys at Law, and Palle Jensen,

for San Jose Water Company, applicant.

Peter G. Fairchild, Attorney at Law, for the Ratepayer

Representation Branch of the Water Division.

Donald McCrea, for the Water Division.

O P I N I O N

I. Summary

San Jose Water Company (SJWC) is authorized to increase its rates by amounts designed to increase revenue by $8,240,700 (7.23%) for 2001; $5,011,000 (4.10%) for 2002; and $3,930,100 (3.09%) for 2003. We authorize rates of return on rate base of 9.23% for the year 2001; 9.25% in 2002; and 9.25% in 2003. The return on common equity (ROE) authorized by this decision is 10.20%.

As a result of the revenue increase granted by this decision, the monthly bill for the average residential customer using 1,500 cubic feet per month would increase by $2.74 or 9.67%, from $28.33 to $31.07 for year 2001.

Also, the Commission adopts a Settlement entered into by the Ratepayer Representation Branch (RRB) of the Water Division and SJWC. The Settlement resolves all issues between RRB and SJWC except for ROE. Following evidentiary hearings on this one issue, the Commission concludes that a constant ROE of 10.20% is just and reasonable for the years 2001-2003.