4. ORA's Recommendation

In its direct testimony, ORA recommended that SJWC's rates be increased by 3.37%, for test year 2004, 1.55%, for test year 2005 and 0.89%, for attrition year 2006. As part of its recommendation, ORA deferred recovery of a number of capital projects to future advice letters, which would be filed after the projects were completed. In addition, ORA recommended that the Commission adopt a 15% discount for qualifying low-income customers and modify the rate design for resale, private fire and residential fire sprinkler services. ORA agreed with SJWC's requests related to recovery of an updated balance of $78,629 in the water contamination litigation account and an updated under-collection of $379,960 in the balancing account. ORA also agreed with the elimination of the fire hydrant balancing account. ORA disagreed with SJWC's request to change to a full cost balancing account and the establishment of a water quality memorandum account. ORA also disagreed with SJWC's request to convert to the use of a computerized straight-line method of calculating depreciation, recommending that any change to the Commission's Standard Practice U-4 for calculating straight-line remaining life depreciation should be done through workshops conducted with interested Commission staff and members of the water industry.