2. Background
Yermo Water Company (Yermo) is a consolidation of three certificated water utilities located ten miles north of Barstow in San Bernardino County near and within the Township of Yermo. These utilities consisted of Yermo, Marine Water Company (Marine) and Hel-Bro Water Company (Hel-Bro).
Yermo became a certificated public utility in 1948 pursuant to Decision (D.) 42197. Marine and Hel-Bro became certificated public utilities in 1963 pursuant to D.64988 and D.65089, respectively. On July 26, 1966, the owners of Yermo acquired Marine and Hel-Bro pursuant to D.71016 and D.71017, respectively. Yermo was subsequently authorized to consolidate Marine and Hel-Bro into Yermo's certificate of public convenience and necessity on December 12, 1983 pursuant to Resolution W-3149. The water systems of Marine and Hel-Bro are adjacent to each other and were subsequently interconnected to each other. The initial water system of Yermo has not been interconnected to the Marine and Hel-Bro interconnected water system.
Donald Walker, the current owner of Yermo, and William Ruff, Jr. were authorized to acquire Yermo through the purchase of all outstanding stock of Marine and Hel-Bro on August 21, 1985, pursuant to D.85-08-082. Walker subsequently acquired Ruff's interest in Yermo and was declared the sole owner of Yermo in Resolution W-3812, dated November 23, 1993. Walker is presently the sole owner of Yermo.
Yermo provides public utility water service to approximately 350 metered customers in Tracts 6593 and 6598 located near the Township of Yermo, and Tracts 2459 and 2195 in the Township of Yermo. A majority of the customers receiving water service from Yermo are single family residents, the number of which has not significantly changed since 1993.1 Yermo supplies water to its customers from wells located to or in close proximity to its service area. It has two stand-alone pressure zones. A Main Zone encompasses the original Yermo service territory and a Hel-Bro Zone encompasses both the Marine and Hel-Bro service territories.
Prior to the filing of this investigation, Yermo's most recent rate increase was granted in 1993. Pursuant to Resolution W-3812, dated November 23, 1993, Yermo was authorized a 13.4% rate of return for its 1993 test year resulting in a revenue requirement increase of 137% or $76,019.2 However, the Commission found Yermo's water system to be antiquated with most of its pipes over 50 years old and in constant need of repair, resulting in numerous customer complaints. Many parts of the water system were found to be badly in need of replacement or upgrading.
Other than some main and service replacements in 1986 and 1987, Resolution W-3812 found that there had been no other replacements since then.3 As part of that revenue requirement increase Yermo was required to: (1) maintain a customer complaint log and comply with General Order (G.O.) 103 with respect to customer complaints, (2) file a plan of action with the Commission's Water Utilities Branch no later than the end of February 1994 detailing the repair work, system upgrading, new personnel hired and/or equipment purchases to be made as a result of the rate increase, and (3) file a report with the Water Utilities Branch showing the progress completed on its plan of action commencing July 1, 1994 and once every six months thereafter.
1 Yermo's 2007 Annual Report to the Commission shows that it has 346 service connections, four of which are business connections and 46 inactive residential customers.
2 Yermo filed a rate increase request in the latter part of 2008 just prior to an evidentiary hearing in this matter. An interim rate increase based on the last Commission Price Index was authorized February 24, 2009 to become effective March 12, 2009.
3 Resolution W-3812 (1993), mimeo. at 2 and 3.
