3. Background
The assigned Administrative Law Judge (ALJ) convened a prehearing conference on March 20, 2008, for the three proceedings and Public Participation Hearings were held on May 28, 2008, in Chualar, and on May 29, 2008, in Monterey.
At the Chualar hearing, several speakers were customers served by the Spreckels wastewater system and they objected to Cal-Am's proposed tripling of their wastewater bill. These customers explained that Spreckels system was a remnant of a company town that existed around the Spreckels sugar factory, which closed in 1994. They explained that the system was simple, low-cost, and would not require the level of expenses Cal-Am described. These customers also complained that Cal-Am's application was confusing and illogically set out.
The Spreckels customers' primary objection to the wastewater application was to Cal-Am's proposal to consolidate all of its eight wastewater systems for ratemaking purposes. This proposal resulted in some customers receiving over 160% rate increases and other customers only 66%. Customers strongly objected to this proposal as being unfair to those systems, such as Spreckels, that are simple and have low costs. Customers explained that many residents of Spreckels are retired and on fixed incomes and will not be able to afford the proposed dramatic increases in wastewater rates. The total proposed increase would constitute about 15% of the total annual income for some retirees on Social Security.
At the conclusion of the public participation hearing, Cal-Am agreed to prepare additional spread sheets explaining the rate increase proposal and to meet with the customers to provide further explanation.
On August 29, 2008, the Central Coast Coalition of Concerned Communities for Wastewater Equity submitted its Motion for Party Status and Objection. The Coalition stated that Cal-Am had not supplied the spreadsheets and data as ordered by the ALJ at the Public Participation Hearing in Chualar and that the Coalition found Cal-Am's cost forecasts to "soar way beyond any reasonable inflation index."
In response to the Coalition's filing, Cal-Am explained that properly preparing the spreadsheets required more time than expected but that the spreadsheets were provided to all participants, including the Coalition.
The assigned Commissioner and ALJ issued their Ruling and Scoping Memo on June 27, 2008, which set forth the procedural schedule and the issues to be resolved. The Ruling also consolidated the Monterey general rate case, General Office rate case, and wastewater rate case.
Evidentiary hearings were held in October on all three applications. On October 23, 2008, Cal-Am and DRA presented a joint witness panel in support of their then-tentative settlement agreement on the wastewater application. The parties cross-examined the witness panel on the terms of the settlement agreement. The witnesses stated their intentions to file and serve the final settlement agreement no later than November 24, 2008.
The Coalition also presented a panel of two witnesses who explained that the substantial increase in wastewater rates sought by Cal-Am in this application was particularly burdensome for customers on fixed incomes, and that Cal-Am's presentation, which the Coalition found confusing and incomplete, had failed to justify an increase of this magnitude.
On November 24, 2008, Cal-Am and DRA jointly filed their Motion for Adoption of Partial Settlement Agreements as to Water and Wastewater Issues between the Division of Ratepayer Advocates and California-American Water Company. The final wastewater settlement agreement was substantially similar to the tentative agreement presented at the hearing, and it is described in more detail below. The settlement agreement, excluding numerous pages of photographs of the Toro System, is Appendix A to today's decision.2
On December 23, 2008, the Coalition submitted its comments in opposition to the settlement. The Coalition asked Cal-Am to keep the pledges made when acquiring the wastewater districts, and to present cost data and rate requests in a "reasonable, comprehensible, and verifiable format."
Cal-Am replied on January 8, 2009, that the Coalition had not identified any substantial objection to the settlement.
2 The entire settlement agreement and motion addresses issues in both the wastewater and Monterey District water general rate cases. A complete copy may be viewed at http://docs.cpuc.ca.gov/efile/MOTION/94575.pdf.
