4. The Rate Case Plan (RCP) and the Filing of Applications, Rate Base Offsets or Requests for Other Proceedings Between Scheduled GRCs

DRA contends that selective project-by-project rate increases are not allowed under the rate case plan (RCP) adopted in D.04-06-018 (2004 RCP) or the revised RCP adopted in D.07-05-062 (2007 RCP).²⁸ DRA recommends that the Commission not approve the proposed rate increase resulting from the Proposed Transaction because, according to DRA, this proceeding should determine only whether the Proposed Transaction is justified and reasonable, but not whether the proposed rate increase requested in connection with the Proposed Transaction should be approved.

DRA asserts that the RCP allows water utilities to file GRCs for rate increases once every three years to streamline rate proceedings. DRA states that SJWC recently completed a GRC with new rates effective January 1, 2007, and contends that a selective rate increase for this project is contrary to providing rate stability for SJWC's ratepayers. DRA recommends that any rate increase be considered in SJWC's next GRC.²⁹

SJWC responds that the RCP does not prohibit water utilities from filing applications more frequently than every three years, if water utilities wish to do so. SJWC contends its request is a rate base offset, not a GRC.³⁰ SJWC states that, while the Commission wanted to streamline the processing of GRCs filed by water utilities, the RCP does not limit water utilities from filing applications, rate base offsets or requests for other proceedings.³¹ SJWC states that, although it could track the costs associated with this Application and seek to recover those costs in a subsequent GRC, it is better to have rates adjusted at the time the transaction is completed.

Discussion

The 2004 RCP states that § 455.2 is the impetus for updating the rate case procedures originally adopted by D.90-08-045. This is because § 455.2 requires the Commission to establish a schedule to require every Class A water corporation to file a GRC application every three years, and the RCP in effect at that time did not provide for a mandatory GRC filing schedule.

D.04-06-018 states that the Commission opened R.03-09-005 to update the RCP adopted in 1990, and that the purpose of the 2004 RCP is to provide Class A water utilities with GRC application content guidance, a filing schedule for all Class A water utilities, and a Commission review and evaluation timeline.³² The RCP is intended to promote timely processing of GRCs, to enable the balancing of the workload of the Commission and its staff over time, and to enable a comprehensive Commission review of the rates and operations of all Class A water utilities by providing for the acceptance of rate case filings on a specified schedule.³³ Nothing in the 2004 RCP prohibits water utilities from filing non-GRC applications, rate base offsets or requests for other proceedings.

The 2007 RCP refined the 2004 RCP to reflect lessons learned while implementing the 2004 RCP, and to incorporate the 2005 Water Action Plan.³⁴ The 2007 RCP made several significant changes to the 2004 RCP. However, none of those changes limit a water utility's ability to file non-GRC applications, rate base offsets or requests for other proceedings.

For example, the 2007 RCP adopted, among other things, Minimum Data Requirements (MDRs), which water utilities are required to complete as part of their GRC and cost of capital testimony in order to reduce discovery during GRC proceedings. The MDRs include the requirement that utilities list each rate change since the last GRC decision by district, including the date, percentage change to a typical residential customer bill, percentage change to revenue requirement, total dollar change, and citations to authority for each increase, and sum to arrive at cumulative rate change by district since the last GRC.³⁵

The MDR instruction to "list each rate change since the last GRC decision" would be unnecessary if, as DRA contends, utilities were not permitted to seek rate changes between GRCs. Thus, the 2007 RCP anticipates the possibility of rate changes occurring between GRCs, and nothing in the 2007 RCP prohibits water utilities from filing non-GRC applications, rate base offsets, or requests for other proceedings. Therefore, we reject DRA's recommendation that any rate increase be considered in SJWC's next GRC.

DRA asserts that the Proposed Decision (PD) errs in its interpretation of the MDRs as discussed above because, according to DRA, the language above refers to any rate changes that were conditionally approved in the previous GRC, including rate base increases, and do not refer to unapproved changes.³⁶

The plain reading of D.07-05-062 and MDRs adopted by that decision do not say what DRA contends they say, and DRA provides no support for its assertion. Therefore, DRA's assertion that the MDRs refer to any rate changes that were conditionally approved in the previous GRC lacks merit.

²⁸ Exh. DRA-1, p. 4. DRA Opening Brief, pp. 14-15.

²⁹ Exh. DRA-1, p. 8.

³⁰ Exh. SJWC-5, p. 3.

³¹ TR 227:13 -27.

³² D.04-06-018, p. 2. See also FOF 2 and COL 1.

³³ D.04-06-018, Appendix, p. 1.

³⁴ D.07-05-062, pp. 1-4. See also FOF 6 and OPs 2-3.

³⁵ D.07-05-062, Appendix A, Attachment 1, Section II.A.8, p. A-23. This requirement is nearly identical to that adopted in D.04-06-018 (Appendix, p. 10).

³⁶ Opening Comments of DRA on Proposed Decision of ALJ Smith, pp. 1-2.