G. True-up of Interim Rates Adopted in D.05-02-007

In D.05-02-007, the Commission granted interim rate relief to Cal-Am for its Sacramento and Larkfield district customers effective February 10, 2005. This interim increase was based on the rate of inflation as compared to existing rates for the districts, and should be adjusted upward, back to the effective date, with the final rates adopted here.

Pursuant to Ordering Paragraph 3 of D.05-02-007, on March 11, 2005, Cal-Am proposed a methodology true-up the interim rates. Cal-Am proposes to calculate the refund or surcharge amount by applying the rate differential to the final decision's adopted water sales and number of customers. After reviewing this proposal, we find the use of actual rather than adopted sales and number of customers is preferable. Therefore, the methodology Cal-Am should use in calculating the surcharge should be based on the actual loss or gain in each district's revenue, which is determined by applying the rate differential to the actual quantities of water sales and the actual number of customers. The surcharge will be fully recovered over the remaining period of 2005.