Conclusions of Law
7. The settlement agreement filed by Cal Am and DRA is reasonable in light of the whole record, consistent with the law, in the public interest and should be adopted.
8. The settlement should not be construed as precedent or policy of any kind in this or future proceedings.
9. An ROE of 10.15% is reasonable in light of the whole record, consistent with the law, in the public interest, and should be adopted.
10. We should not adopt Cal Am's consolidation proposal for the Larkfield and Sacramento districts.
11. Cal Am's figures for employee pensions and benefits expenses and regulatory expenses are reasonable and should be adopted.
IT IS ORDERED that:
1. The Motion of California-American Water Company and the Division of Ratepayer Advocates for adoption of the settlement agreements as to certain issues on the revenue requirements for Larkfield and Sacramento districts filed on July 6, 2007, and attached as Attachment A, is granted.
2. The Larkfield and Sacramento districts' revenue requirement tables, attached as Attachment B, are adopted.
This order is effective today.
Dated May 15, 2008, at San Francisco, California.
I will file a concurrence.
/s/ MICHAEL R. PEEVEY
President
A.07-01-036 - California-American Water Company
D.08-05-018
President Michael R. Peevey's concurring opinion:
I concur, barely, with today's decision. The unique set of circumstances in this case leads me to conclude that consolidation is not warranted.
However, I want to make clear that I find that there are many important public policy reasons to support consolidation generally. Water is a necessity of life. This Commission has repeatedly found that other basic necessities, such as electricity and telecommunications, should be subsidized in certain instances. In the telecommunications field alone, we have a program to support high cost areas served by small companies (California High Cost Fund-A) and also have a separate program to assist low-income ratepayers (Universal Lifeline Telephone Service).
Having an intra-company averaging of rates makes high cost areas more affordable for customers. Such a consolidation of districts avoids a formal Commission-sponsored program. Indeed, one can argue that a consolidation of districts has no ongoing costs and is therefore of the utmost efficiency.
While I did not support consolidation in this proceeding, I believe consolidation generally provides needed rate relief for customers in high cost areas and is a very efficient method of delivering these benefits.
/s/ MICHAEL R. PEEVEY
Michael R. Peevey, President
May 15, 2008
