3. Memorandum Accounts

The Water Utilities request creation of memorandum accounts for each water utility participating in the OEEP pilots. The memorandum accounts would track OEEP costs and payments from the Energy Utilities.

The Water Utilities should be authorized to create Operational Energy Efficiency Program Memorandum Accounts, to track their OEEP project costs and payments from the Energy Utilities. The creation and use of these memorandum accounts will preserve an opportunity for the Water Utilities to seek recovery of the net recorded costs at a later date, while avoiding retroactive ratemaking issues.

The Commission considers case-specific factors to determine whether expenses should be tracked in memorandum accounts. In this circumstance, the authorization of memorandum accounts to track the Water Utilities' OEEP costs and payments from the Energy Utilities is sound public policy. The OEEP pilot projects are intended to determine if the technologies can improve efficiency and are cost-effective. If they are cost-effective, ratepayers will benefit from these projects and possible expansions of these projects.

Each participating Water Utility may seek recovery of its net recorded OEEP costs in its next general rate case or, if it does not have general rate cases, through a Tier 3 advice letter filing. The authorization of a memorandum account does not, of itself, mean that the Commission has determined that the types of costs to be recorded in the account should be recoverable in addition to rates that have been otherwise authorized, e.g., in a general rate case. Each utility will bear the burden when it requests recovery of the net recorded OEEP costs, to show both that separate recovery of the types of costs recorded in the account is appropriate and that the level of net recorded OEEP costs is reasonable and prudently incurred.