Background

The source of raw water for the system is Clearlake. Watershed activities include agriculture, raising of livestock, gravel mining, and recreation. Clearlake is subject to extensive recreational use and there is substantial development along the lakeshore. The lake is subject to sewage hazards such as septic tank overflows and accidental discharges of treated or untreated wastewater from regional sewer systems. Large algae blooms occur during two major periods of the year causing severe taste and odor problems, imparting color to the water, and interfering with coagulation and clogging filters at the treatment plant. Raw water quality changes continually, requiring close monitoring and frequent adjustment of chemicals for treatment.

In D.89-11-017, the Commission authorized SCWC to construct a treatment plant at a cost of $1,275,000 to serve 2,145 customers with a capacity of 1,050 gallons per minute (gpm). Upon completion, however, SCWC sought to include the plant in ratebase at a cost of $3,100,500, based on a capacity of 1,500 gpm, even though neither the number of customers nor their maximum daily demand had changed since the Commission authorized the project. On review, the Commission determined that recovery of only $1,500,000 of this cost should be authorized, since the plant had excess capacity of approximately 500 gpm, or 1/3 of its total capacity. And, as the Commission further found, "SCWC should not be authorized to include the balance of $1,600,000 in ratebase until such time as its Clearlake customers require additional plant capacity." (D. 93-06-035, 49 CPUC2d 511, 519.)

In 1992, when the treatment plant became operational, the Surface Water Treatment Rule¹ required that finished water supplied by a treatment plant not exceed a 0.5 Nephelometric Turbidity Unit (NTU) turbidity standard.

In 1993, the Surface Water Treatment Rule, which is currently in effect, was revised to require plants constructed in 1993 and thereafter to provide finished water that did not exceed a 0.2 NTU standard, a more stringent requirement.

In 1995, the Department of Health Services (DHS) issued its Cryptosporidium Action Plan in response to numerous outbreaks of waterborne Cyptosporidiosis that had occurred throughout the United States in the prior ten years. Because the Cryptosporidium parasite is commonly found in surface water sources, DHS concluded that it is important that water systems using surface water optimize the water treatment process to maximize DHS' Cryptosporidium removal. The Cryptosporidium Action Plan sets forth the following water quality goal:

In 1996, the California Legislature passed legislation that directed DHS to implement the Cryptosporidium Action Plan.²

In 1997, the DHS sent a letter to SCWC reiterating the requirements of its Cryptosporidium Action Plan. The letter states:

"These goals are not legally enforceable performance standards as those contained in the SWFDTR. A water system is not in violation of any existing water quality standard if it does not achieve these goals. However, if a treatment facility is not achieving these goals the Department will expect the utility to take actions, and incorporate those actions into its operations plan, to improve the performance of its treatment facility." (DHS letter dated July 9, 1997, emphasis in original Ex. 1 at B, p. 2.)

In 1997, following an inspection of the treatment plant, DHS noted in its report the fact that since 1996, SCWC has been a participant in the U.S. Environment Protection Agency Partnership for Safe Water and had implemented most of DHS' Cryptosporidium Action Plan, including the settled water and finished water turbidity goals. In a letter dated January 21, 1998, DHS commended SCWC on its efforts to produce the highest quality treated water for delivery to its customers.

During the 1997 inspection DHS also evaluated the treatment plant's ability to meet the Cryptosporidium Action Plan goals with respect to its design parameters. DHS concluded that the major operating design constraint of the plant was the sedimentation basin. DHS recommended that the sedimentation basin be limited to a rate of 720 gpm because the basin is only eight feet deep. The 720 gpm capacity of the sedimentation basin determines overall plant capacity because the various treatment processes cannot be operated at different flow rates.