Settlement Terms
Table 1 compares CalAm's and RRB's initial positions on revenue requirement change for each test year and the attrition year with what they propose in the Settlement. MPWMD and DOD/FEA did not advocate a specific revenue requirement.
Table 1
Requested vs. Adopted Increases
2000 |
2001 |
2002 | ||||
$ (000) |
% |
$ (000) |
% |
$ (000) |
% | |
CalAm Requested |
2,594.6 |
11.7 |
1,041.6 |
4.2 |
893.3 |
3.5 |
RRB Recommended |
(3,005.5) |
(13.4) |
132.8 |
0.7 |
201.6 |
0.9 |
Settlement/Adopted |
875.0 |
3.9 |
444.5 |
2.0 |
508.3 |
2.2 |
The Settlement indicates each of the areas of major difference between the parties' initial positions and summarizes how those differences were resolved. Final revenue requirements were based on an agreed-upon 9.95% return on equity each year, which combined with capital ratios and cost of debt gives returns on rate base of 8.84%, 8.73%, and 8.71% for 2000, 2001 and 2002.
The active parties ask the Commission to adopt the summary of earnings in Table 2.
Table 2
California-American Water Company
Monterey Division
Adopted Summary of Earnings
(Dollars in Thousands)
2000 |
2001 | |
Operating Revenues |
||
Metered |
$ 22,782.6 |
$ 23,218.3 |
Flat Rate |
297.4 |
303.4 |
Other |
33.2 |
35.8 |
Construction |
84.9 |
87.3 |
Misc. Service |
6.9 |
6.9 |
Rents |
10.1 |
10.5 |
Deferred Rev. CIAC |
20.5 |
20.2 |
Total Operating Revenues |
$ 23,235.6 |
$ 23,682.4 |
Operating Expenses |
||
Source of Supply Operation Expenses |
42.7 |
43.4 |
Source of Supply Maintenance Expenses |
98.7 |
101.1 |
Purchased Power |
1,437.8 |
1,437.9 |
Payroll/Labor |
3,353.3 |
3,418.4 |
Pumping Operation Expenses |
141.9 |
144.7 |
Pumping Maintenance Expenses |
148.0 |
150.0 |
Water Treatment Operation Expenses |
78.4 |
74.4 |
Water Treatment Maintenance Expenses |
59.0 |
60.5 |
Chemicals |
326.4 |
326.4 |
Storage Facilities Expenses |
21.4 |
22.1 |
Transmission & Distribution Operation Expenses |
197.9 |
202.7 |
Transmission & Distribution Maintenance Expenses |
544.1 |
588.4 |
Customer Accounts Operation Expense |
23.3 |
23.8 |
Uncollectibles |
66.6 |
67.9 |
Subtotal O & M Expenses |
6,539.5 |
6,661.7 |
Administrative & General Expenses |
5,015.8 |
5,041.7 |
Depreciation Expense |
3,151.5 |
3,377.1 |
Ad Valorem Taxes |
683.6 |
681.8 |
Payroll Taxes |
260.1 |
265.3 |
State Income Taxes |
438.5 |
432.2 |
Federal Income Taxes |
1,539.8 |
1,491.8 |
Total Operating Expense |
$ 17,628.8 |
$ 17,951.6 |
Net Operating Revenue |
$ 5,606.8 |
$ 5,730.8 |
Average Rate Base |
$ 63,376.1 |
$ 65,577.2 |
Return on Rate Base |
8.84% |
8.73% |
The parties' agreed outcome on each of the numbered Special Requests summarized above is set forth in the Settlement at Section 12 and will not be repeated here.
Despite their failure to come to closure on rate design, the active parties were able to agree on several important aspects as described in the Settlement's Section 11. They agree that CalAm's current rate design should form the base for increased rates to be implemented in 2000. RRB and CalAm differ, however, on CalAm's proposal to append additional, higher rate blocks to the current design to curb excessive consumption by CalAm's highest residential and commercial users. They also agree that a new, per capita rate design with a structure resembling that which CalAm has proposed is needed to address future periods of water shortage. Where CalAm's Application anticipated putting the per capita design permanently into effect in July, 2000, the parties have agreed to later implementation triggered by CalAm's notification to the Commission if and when it has exceeded its SWRCB-permitted draw for the water year to date from Carmel River diversions, followed by reversion to the current rate design when the shortage subsides. A fuller description of the parties' rate design positions and our discussion of this sole remaining issue are set forth in a later section.
