8. Comments on Proposed Decision

The proposed decision (PD) of the ALJ in this matter was mailed to the parties in accordance with § 311(d) of the Pub. Util. Code and Rule 77.1 of the Rules of Practice and Procedure. Comments were filed on or before August 9, 2004, and reply comments were filed on or before August 16, 2004.

In its comments, SJWC requests the PD be modified to include language authorizing the company to recover the revenue differential resulting from rates authorized by this decision and interim rates authorized by D.03-12-007, for the period January 1, 2004 to the effective date of this decision. D.03-12-007 provided that "interim rates shall remain subject to refund and shall be adjusted upward or downward, back to the interim rate effective date, consistent with the final rates adopted by the Commission." (D.03-12-007, Ordering Paragraph 3). SJWC proposes a surcharge methodology, which is consistent with that previously adopted for California Water Service Company in D.04-06-019. SJWC's request is reasonable and will be incorporated in the final decision.

While this general rate case proceeding was pending, SJWC filed Advice Letter No. 348 on May 7, 2004, to increase its quantity rate to offset increases in supply costs. The Commission granted the advice letter in Resolution W-4479, authorizing SJWC to increase the quantity rate by $0.0758/ccf, effective July 13, 2004. In its comments, SJWC requests that the quantity rates adopted in the PD be adjusted to reflect the offset rate increase of $0.0758/ccf. This request is consistent with Commission practice and will be incorporated in the final decision.

VTA comments that the PD failed to consider quantified evidence of immediate ratepayer benefit from reliability and longevity of relocated water pipes, in evaluating VTA's request that certain relocation costs be refunded to VTA and recovered through water rates as additional rate base. There is no basis for modifying the PD in this respect. The record indicates that VTA did not specifically quantify immediate reliability benefits. Also, the PD did consider longevity in its evaluation of VTA's extended life analysis. However, the extended life benefits were adjusted, by the PD, to reflect the present worth to ratepayers based on the time value of money. This is necessary, since extended life of a pipe is a future benefit.

VTA also comments that the PD concedes a 4% ratepayer benefit and at least that amount should be refunded to VTA. To clarify, the PD was willing to consider a ratepayer benefit analysis, because assigning 100% of the cost responsibility to VTA, by the "primary beneficiary" assignment, appeared harsh when ratepayer benefits were purported by VTA to be as high as 37.4%. However, after finding that that the ratepayer benefits are much less than 37.4%, it is reasonable to designate VTA as the "primary beneficiary" as defined in prior Commission decisions, and it is not necessary to deviate from the practice of having the "primary beneficiary" absorb all costs.