Comments on Proposed Decision
The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1 of the Rules of Practice and Procedure. Comments were filed on __________, and reply comments were filed on ________________.
1. In D. 97-12- 097, the Commission required that Citizens bring its total system supply capacity to a level of 550 gpm before the moratorium on new connections instituted in 1979 may be lifted.
2. D. 97-12-097 also required that Citizens revise its approved 1996 Master Plan to incorporate DWR recommendations.
3. In this proceeding, Citizens has revised its 1996 Master Plan and requests adoption of the 2000 Master Plan of improvements for a seven- year period. The new plan includes four new wells, three new storage tanks, and substantial pipeline replacement to provide within five years a total supply capacity of at least 550 gpm at an estimated cost of $7.402 million, or roughly $1.084 in rates per year for seven years.
4. Cal-Am, which seeks to purchase Citizens in the pending A.00- 05-015, joins Citizens' request to adopt the 2000 Master Plan.
5. Based upon its estimated demand of 440 gpm, ORA recommends that the Wagner Valley and second proposed McNee Ranch wells be deferred. ORA also recommends deferring one 650,000 gallon storage tank at the Schoolhouse and related pumping projects.
6. ORA estimates the costs of its proposed 2000 Master Plan improvements to be $4.557 million. ORA requests that recovery for improvements be capped at this amount.
7. ORA recommends that Citizens be allowed to file three advice letters over the next three years to recover costs and that in 2003 Citizens should file an application requesting to complete the second phase of improvements with any then-existing cost overruns.
8. ORA recommends that Citizens be ordered to file annual compliance reports indicating that it has completed the Commission-ordered plant improvements.
9. ORA recommends that Citizens expand its conservation program to include an Ultra Low-Flush Toilet rebate of $50 per toilet to customers who purchase and install this plumbing. However, justifiable increases in administrative costs are not included.
10. ORA recommends that Citizens gradually increase its service charge to larger meters to move closer to ratios in conformity with Commission policy.
11. Hydrologic information and data (both surface water and groundwater) for the area in and surrounding Montara is limited.
12. Feasible development options to augment the Montara area water supply include local surface water development, groundwater development, desalination, and negotiation of a water transfer. Of these options, groundwater development and negotiation of a water transfer appear to be relatively lower cost, and the most easily developed option appears to be groundwater development, especially from the Denniston sub-basin.
13. Exploratory drilling can answer a number of immediate questions related to the feasibility of the McNee Ranch and Wagner Valley groundwater options at minimal cost. A pump test, hydrogeologic information derived during the drilling, and minimal analysis should provide adequate information to decide whether to proceed with a design.
14. The amount of water available through negotiation of a water transfer is limited by conveyance space in relevant pipelines and aqueducts. A water transfer would likely be more expensive than groundwater development, but is feasible and could potentially provide a larger long-term yield.
15. MSD requests that Citizens be ordered to investigate consolidating the Montara District with other districts to minimize the rate impact of any authorized improvements. MSD estimates that the rate impact on other districts would be minimal. Establishing a single tariff for two or more districts requires a persuasive showing that the benefits of doing so outweigh the burden of higher rates and subsidizing rates by some customers.
16. By exploring least-cost financing options for the proposed improvements, including the joint development of additional water supplies with MSD through use of its access to low-interest loans from the State and tax-exempt financing, Citizens may achieve substantial savings.
17. Adopting the ORA recommended deletion of two proposed wells would leave Citizens short of the 550 gpm the Commission has ordered as a condition to lifting the moratorium on new connections.
18. DWR's recommendations set forth in the foregoing opinion are reasonable.
19. New wells need lead time before final construction may begin, including digging an exploratory well to analyze production capabilities.
20. Those leaks should be repaired first that have historically created the most problems. Continuing until completion the pipe replacement program will conserve water.
21. The cost of implementing and the impact on rates of the proposed 2000 Master Plan is significant; however, the system is still in dire need of improvement and the costs will only increase if needed projects deferred to the future.
22. The two wells that we defer from the 2000 Master Plan may be needed eventually to increase supply if lower cost options are not available.
1. The proposed 2000 Master Plan as herein revised complies with D.97-12-097.
2. The cost estimates provided by ORA in this proceeding are more reasonable than Citizens' and reflect likely actual costs to construct the authorized projects.
3. The proposed 2000 Master Plan as herein revised is the most reasonable list and schedule of projects for improvements in the Montara District to increase water capacity to 550 gpm, provide adequate service to customers, and meet General Order 103 requirements.
4. Given the long delay since 1991 in approving a Master Plan for improvements in the Montara District, the order in this proceeding should be effective today so that Citizens may begin construction of the authorized improvements, monitoring projects, and other efforts to improve service in this district, manage costs, and conform service charges to Commission policy.
IT IS ORDERED that:
1. The Citizens Utilities Company of California (Citizens) 2000 Master Plan for water supply in Citizens' Montara District, is adjusted and authorized as follows:
a. Reschedule pipe replacement projects to begin in Year 1 as proposed, but continue until completed.
b. Citizens may construct the new Wagner Valley Well, but only if Citizens assesses, prior to final construction of the well, all options for water supply available then and within the time frame it takes to complete the well, including water transfers, wheeling, diversion of water from Montara and Martini Creeks, and additional pumping of water at the airport. Citizens must preserve and present with any later request for cost recovery all evidence forming the basis of its conclusion that no options other than the new well will supply, for the same estimated cost, the amount of water needed to increase water production to a minimum of 550 gallons per minute (gpm).
c. Citizens may construct the second new McNee Ranch Well, but subject to the conditions set forth in Ordering Paragraph 1b, above.
d. Future investigations into local surface water and other supply sources, such as wheeling and water transfers, shall begin immediately.
e. Citizens shall delete the pipeline between the two McNee Ranch wells, if the second new well is not constructed.
f. Citizens shall reduce to $6,000 the estimated annual cost for monitoring at the McNee Ranch Well Field, if the second new well is not constructed.
g. Citizens shall delete the second 650,000 storage tank at the Schoolhouse site and related site work, piping and valves.
h. Citizens shall defer construction of the new Operations Building until Years 4 and 5.
i. Citizens shall defer construction of two fire pumps, a standby power system, related electrical and instrumentation from Years 2 and 3 to Years 4 and 5.
2. Within the next seven years, Citizens may file annual advice letters to recover actual costs of improvements completed within the year that do not exceed the estimates herein. To seek recovery of actual costs that exceed these estimates, Citizens must submit a separate application or subsequent rate case filing. In any advice letter filing or other proceeding, the request to recover actual costs for the Wagner Valley or second McNee Ranch well must be accompanied by Citizens' evidence that Citizens assessed, prior to final construction of the well, all options for water supply available then and within the time frame it takes to complete the well, including water transfers, wheeling, diversion of water from Montara and Martini Creeks, and additional pumping of water at the Airport.
3. Citizens should immediately begin in good faith to explore whether low-cost financing and/or lease options via MSD are possible, and should use such options where costs may be reduced.
4. If Citizens elects to proceed with the Wagner Valley and McNee Ranch wells, its Commission filing seeking recovery should document its efforts to work with MSD to provide a lower cost supply solution. For any future recovery proceeding, MSD may present evidence that lower cost financing or jointly-developed supply options were available and rejected by Citizens, the costs of which should be imputed in determining the costs for recovery.
5. Citizens shall file annually and may include with any request for recovery of costs a report of joint efforts with MSD, implementation of DWR recommendations, and completed projects, including a statement of whether these projects were completed within the authorized schedule of improvements, and if not, why not, whether costs increased due to any delay, and the estimated completion date.
6. Citizens shall expand its conservation program in the Montara District to include an Ultra Low-Flush Toilet rebate of $50 per toilet to each customer who purchases and installs this plumbing. Citizens may record in a memorandum account costs for the administration of this program and actual rebate paid to customers and may seek recovery in a future advice letter or application.
7. Application 00-10-049 is closed.
This order is effective today.
Dated _________________, at San Francisco, California.
