Decision 08-06-024 June 12, 2008
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the matter of the Application of SAN GABRIEL VALLEY WATER COMPANY (U337W) for Authority to Increase Rates Charged for Water Service in its Fontana Water Company Division by $5,662,900 or 13.1% in July 2006; $3,072,500 or 6.3% in July 2007; and by $2,196,000 or 4.2% in July 2008. |
Application 05-08-021 (Filed August 5, 2005) |
Order Instituting Investigation on the Commission's Own Motion into the Rates, Operations, Practices, Service, and Facilities of San Gabriel Valley Water Company (U 337 W). |
Investigation 06-03-001 (Filed March 2, 2006) |
ORDER MODIFYING DECISION 07-04-046,
GRANTING LIMITED REHEARING REGARDING ISSUES INVOLVING
RULE 1 VIOLATION RELATED TO AFFILIATE TRANSACTION,
AND DENYING REHEARING OF THE DECISION, AS MODIFIED,
IN ALL OTHER RESPECTS
I. INTRODUCTION
In Decision (D.) 07-04-046 ("Decision") we addressed San Gabriel Valley Water Company's General Rate Case Application (A.) 05-08-021, seeking authority to increase rates charged for water service in its Fontana Water Company Division for test years 2006 - 2007 and escalation years 2007 - 2008 and 2008 - 2009. In summary, the Decision reduces rates by $1,948,900 for Test Year (TY) 2006 - 2007, and reduces rate base as of July 17, 2004 by $2,994,582. The Decision also refunds to ratepayers overcharges since July 17, 2004 in the amount of $522,200 annually, and orders a fine of $60,000 for three violations of Rule 1 of the Commission's Rules of Practice and Procedure.
San Gabriel Valley Water Company ("San Gabriel") timely filed an application for rehearing of D.07-04-046, raising the following allegations of error: (1) the Decision errs in its allocation of proceeds from a contamination settlement in that it fails to recognize the extraordinary risk confronted by San Gabriel, is inconsistent with past Commission decisions in similar cases, and fails to recognize tax consequences in the calculation of net proceeds; (2) the Decision errs in finding that San Gabriel violated Rule 1 of the Commission's Rules of Practice and Procedure in its GRC showing related to land purchased from an affiliate; and (3) the Decision errs in finding that San Gabriel's sales to California Steel Industries (CSI) will remain closer to historical levels than San Gabriel's projection. Division of Ratepayer Advocates (DRA)1 filed a timely response to San Gabriel's application. City of Fontana filed a "Joinder" to the DRA response.
City of Fontana, DRA and Fontana Unified School District (Joint Parties) filed a timely application for rehearing of D.07-04-046,2 raising the following allegations of error: (1) the Commission erroneously failed to conduct a review of projects constructed after 2002;3 (2) exempting the Sandhill Project from the rate base cap is arbitrary and capricious and not supported by substantial evidence; (3) granting advice letter treatment to the Sandhill Project is arbitrary and capricious and not supported by substantial evidence; (4) findings that San Gabriel has maintained adequate records regarding investment of proceeds from various sources are contradicted by the record and the Decision; and (5) the $2.3 million service duplication award should be allocated to ratepayers without waiting for further proceedings. San Gabriel filed a response to the application for rehearing.4
We have reviewed each and every allegation in the rehearing applications. We grant limited rehearing regarding the issue of Rule 1 violations related to San Gabriel's purchase of real property from an affiliate and the adequacy of its disclosures regarding the affiliate transaction in this GRC proceeding. Further, we provide parties in the next GRC the opportunity to address the reasonableness of projects that have been constructed since 2002. We modify D.07-04-046 in order to further clarify that the Decision did not address future tax consequences related to the Internal Revenue Code section 1033 election regarding proceeds from the Mid - Valley Landfill contamination settlement. We also add and delete findings of fact as discussed herein. Except for the limited rehearing granted on the issues involving the Rule 1 violations, we deny rehearing of D.07-04-046, as modified, in all other respects.
1 During the course of the proceedings addressed herein Office of Ratepayer Advocates (ORA) became Division of Ratepayer Advocates (DRA). To avoid confusion, "DRA" is used throughout this order.
2 Joint Parties' application is titled, "City of Fontana, Division of Ratepayer Advocates, and Fontana Unified School District's Application for Rehearing and Reconsideration of Decision 07-04-046," citing as authority Rule 16.1 of the Commission's Rules of Practice and Procedure (Cal. Code of Regs., tit. 20 § 16.1.) The application is being reviewed as an application for rehearing pursuant to Rule 16.1 and Public Utilities Code section 1732. (Unless otherwise stated, all rule references herein are to the Commission's Rules of Practice and Procedure.)
3 This argument involves the limited rehearing we granted in San Gabriel's previous General Rate Case ("GRC") (A.02-11-044) to determine, among other things, whether San Gabriel had met its burden of proof regarding its request for a rate increase and whether San Gabriel's proposed construction projects were needed, reasonable and justified. The rehearing was consolidated with the instant GRC proceeding. (Order Modifying and Granting Limited Rehearing of Decision 04-07-034 [D05-08-041] p. 14, Ordering Paragraph 2.) We issued a decision on the rehearing issues on June 15, 2006. (Opinion on Limited Rehearing of Decision 04-07-034 [D.06-06-036].)
4 Joint Parties also filed a petition for modification of the Decision. Those issues were addressed in D.08-04-005.
