ALJ/JJJ/tcg Mailed 3/18/2004
Decision 04-03-040 March 16, 2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
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Application of California Water Service Company (U 60 W), a corporation, for an order authorizing it to increase rates charged for water service in the Redwood Valley District by $566,100, or 78.3%, in 2003, by $205,600, or 16.0% in 2004, by $200,300, or 13.4%, in 2005, and by $201,000, or 11.9% in 2006. |
Application 02-11-020 (Filed November 8, 2002) |
(See Appendix G for Appearances.)
I. Summary
California Water Service Company (Cal Water) initially requested authorization to increase present revenues in the Redwood Valley District by 78.3%, or $566,100 in 2003, 16.0%, or $205,600 in 2004, 13.4%, or $200,300 in 2005, and 11.9%, or 201,000 in 2006. This decision authorizes Cal Water an overall general rate increase for test year 2004 of $197,600 (about 28%), as well as the ability to file (by advice letters) for attrition year adjustments in 2005 and 2006. This decision also adopts a rate of return (ROR) of 8.11% and a return on equity (ROE) of 9.32%.
One of the reasons for the large difference between Cal Water's original request and our authorized rate increase is that during hearings, the parties agreed to take the estimated costs of new water treatment plants for the Lucerne
and Coast Springs Divisions out of rate base now. The parties anticipate that the funds will be made available under a low interest loan from the Safe Drinking Water State Revolving Fund (SDWSRF) administered by the Department of Health Services (DHS). If DHS approves the loan, we anticipate that Cal Water will apply to the Commission to increase the Redwood Valley District's rates in order to assist in repayment of this loan. We will address this issue if and when Cal Water applies.
Under our adopted rate design, all of the divisions of the Redwood Valley District located in Sonoma County would receive uniform rates. Lucerne and Coast Springs, located in Lake and Marin Counties respectively, would receive stand-alone rates. Because this is the first rate case for the Redwood Valley District as a unified district, and many divisions have not had a rate increase in many years, the increase in the average monthly bill among all the divisions is not equal. Lucerne's current rates were the most out of line with the reasonable cost of service, and they are increasing by about 58%, the most of any of the divisions. However, this is the lowest increase possible for Lucerne under the various rate design proposals presented.
