App E-p.2

Appendix E

Page 2 of 4

San Gabriel Valley Water Company

Fontana Water Company Division

Calculation of Effect on TY 2004 Rate Base and Revenue Requiremnt frfom After-Tax

Allocation of Gains on Sale of Property From 1996 Through 2004

Allocation of Gains on Sale

(Dollars in thousands)

2003

2004

BOY

EOY

AVG

BOY

EOY

AVG

(a)

(b)

(c)

(d)

(e)

(f)

RATE BASE

Plant

1

Adjustment

$2,618.3

$2,618.3

$2,618.3

$2,618.3

$2,618.3

$2,618.3

Contributions

2

Adjustment

$2,373.7

$2,373.7

$2,305.6

$2,305.6

3

Less 2.6% * Line 1

($68.1)

($68.1)

4

Subtotal

$2,305.6

$2,339.7

$2,237.5

5

Adjustment - Additional Amount

$2,994.6

$2,994.6

6

Less 2.6% * Line 5 (half-year)

($38.9)

7

Subtotal

$2,955.7

8

Total Contributions Adjustment

$5,300.2

$5,193.2

$5,246.7

Depreciation Expense

9

Plant Adjustment (Line 1)

$2,618.3

$2,618.3

10

Plus 2.6% * Line 9

$68.1

$68.1

11

Add'n Contributions Adjustment (Line 3 + 6)

($68.1)

($107.0)

12

Total Depreciation Exp. Adjustment

$0.0

($38.9)

Deferred Taxes

13

Adjustment

$43.1

$43.1

$43.1

$43.1

$43.1

$43.1

Accum. Depreciation

14

Adjustment

$201.5

$201.5

$269.6

$269.6

15

Reverse Deprec. Adjustment (Line 10)

$68.1

$68.1

16

Depreciation on Contributions (Line 6)

$0.0

$38.9

17

Total Accum. Deprec. Adjustment

$269.6

$235.5

$376.6

$323.1

Rate Base

TY 2004

18

Plant excluded from Rate Base per D.04-07-034 (Line 1)

$2,618.3

19

Contributions (Line 8)

($5,246.7)

20

Accum. Depreciation (Line 17)

($323.1)

21

Deferred Taxes (Line 13)

($43.1)

22

Net Additional Rate Base Adjustment

($2,994.6)

REVENUE REQUIREMENT

Return @ 9.4%

23

Change in Rate Base (Line 22)

($2,994.6)

24

Change in Return (Line 23 * 9.40%)

($281.5)

25

Line 24 times adopted N-T-G of 1.806051

($499.0)

26

Depreciation Expense (Line 12)

($38.9)

Ad Valorem Tax

27

Change in BOY Depreciated Plant (Line 1 less Line 14)

$2,348.7

28

Taxes @ 0.669%

$15.7

29

Net Rev. Rqmt. Adjustment

($522.2)


					Appendix E
					Page 2 of 4

				San Gabriel Valley Water Company
				Fontana Water Company Division

		Calculation of Effect on TY 2004 Rate Base and Revenue Requiremnt frfom After-Tax
			Allocation of Gains on Sale of Property From 1996 Through 2004
					Allocation of Gains on Sale
					(Dollars in thousands)

					2003			2004
				BOY	EOY	AVG	BOY	EOY	AVG
				(a)	(b)	(c)	(d)	(e)	(f)
RATE BASE
	Plant
1	Adjustment			$2,618.3	$2,618.3	$2,618.3	$2,618.3	$2,618.3	$2,618.3

	Contributions
2	Adjustment			$2,373.7	$2,373.7		$2,305.6	$2,305.6
3	Less 2.6% * Line 1				($68.1)			($68.1)
4		Subtotal			$2,305.6	$2,339.7		$2,237.5

5	Adjustment - Additional Amount						$2,994.6	$2,994.6
6	Less 2.6% * Line 5 (half-year)							($38.9)
7		Subtotal						$2,955.7
8		Total Contributions Adjustment					$5,300.2	$5,193.2	$5,246.7

	Depreciation Expense
9	Plant Adjustment (Line 1)					$2,618.3			$2,618.3
10	Plus 2.6% * Line 9					$68.1			$68.1
11	Add'n Contributions Adjustment (Line 3 + 6)					($68.1)			($107.0)
12		Total Depreciation Exp. Adjustment				$0.0			($38.9)

	Deferred Taxes
13	Adjustment			$43.1	$43.1	$43.1	$43.1	$43.1	$43.1

	Accum. Depreciation
14	Adjustment			$201.5	$201.5		$269.6	$269.6
15	Reverse Deprec. Adjustment (Line 10)				$68.1			$68.1
16	Depreciation on Contributions (Line 6)				$0.0			$38.9
17		Total Accum. Deprec. Adjustment			$269.6	$235.5		$376.6	$323.1

	Rate Base						TY 2004
18	Plant excluded from Rate Base per D.04-07-034 (Line 1)						$2,618.3
19	Contributions (Line 8)						($5,246.7)
20	Accum. Depreciation (Line 17)						($323.1)
21	Deferred Taxes (Line 13)						($43.1)
22			Net Additional Rate Base Adjustment				($2,994.6)

REVENUE REQUIREMENT
	Return @ 9.4%
23	Change in Rate Base (Line 22)					($2,994.6)
24	Change in Return (Line 23 * 9.40%)					($281.5)
25	Line 24 times adopted N-T-G of 1.806051						($499.0)

26	Depreciation Expense (Line 12)						($38.9)

	Ad Valorem Tax
27	Change in BOY Depreciated Plant (Line 1 less Line 14)					$2,348.7
28	Taxes @ 0.669%						$15.7
29				Net Rev. Rqmt. Adjustment			($522.2)