13. Assignment of Proceeding
John A. Bohn is the assigned Commissioner and Kenneth L. Koss is the assigned Administrative Law Judge in this proceeding.
1. The parties resolved most, but not all, of the disputed issues in the settlement conference and subsequent settlement agreement.
2. The settlement is reasonable in light of the whole record, consistent with the law, and in the public interest, and the agreement complies with Commission rules regarding settlements.
3. As a result of the settlement, Suburban reduced the amount of its requested rate increase by approximately 19%.
4. An evidentiary hearing was necessary with respect to the unresolved issues.
5. Suburban correctly applied the FFM in allocating its expenses.
6. Suburban's projections for Working Cash are reasonable as DRA and Suburban agree on the calculation methodology, and related ancillary issues were otherwise determined.
7. Suburban is a subsidiary of Southwest.
8. Southwest's projected expenses are reasonable in light of its software licensing agreement, switching to a calendar year reporting basis, and in order to comply with federal reporting requirements.
9. It is reasonable that Suburban file a formal application for authority to establish a holding company.
10. It is unreasonable to direct Suburban to institute affiliate transaction rules with respect to its subject application for rate increases.
11. It is unreasonable to direct Suburban to compute a DPAD as this deduction is non-existent.
12. DRA's arguments generally are not persuasive to the level necessary to justify a rate increase less than that requested by Suburban.
13. It is premature to make any determinations regarding Project Cornerstone as all of the necessary data is not yet available.
14. The following four new positions requested by Suburban are necessary in order to more efficiently carry out its responsibilities with respect to water quality, supplier diversity, and other administrative functions: Water Quality Conservation Coordinator; Supplier Diversity Coordinator; IT Support Tech; and, Benefits Analyst.
15. Suburban's RHP is now treated as an active non-tariffed service, as defined in D.00-07-018.
16. The Commission's Water Action Plan established certain goals and activities for Class A water companies, and as required Suburban reported on its activities in the subject application, its general rate case.
17. Suburban's descriptions of its activities do not fully address all of the issues required by the RCP and the Water Action Plan, and it is necessary to direct Suburban to submit updated annual reports on its activities undertaken in 2008 and 2009.
18. Suburban's post-settlement adjusted rate increase request is reasonable, as it allows Suburban to recover a reasonable amount of increased costs; promotes operational efficiency, infrastructure development, and investment; and, keeps the burden on ratepayers as low as reasonably possible.
1. The settlement between Suburban and DRA should be approved.
2. The full amount of Suburban's post-settlement adjusted rate increase should be authorized, as described herein.
3. Suburban should be required to report in future Advice Letters the activities it undertook in 2008 and 2009 with respect to the Commission's Water Action Plan requirements.
4. Suburban should be required to file a formal application requesting authority to establish a holding company.
5. Suburban should not be authorized now to recover costs associated with Project Cornerstone through an Advice Letter, though Suburban may revisit this issue at a later date.
6. Suburban should maintain a separate memorandum account with respect to Project Cornerstone.
7. Suburban's RHP should continue to be considered as "excess capacity" pending the outcome of a future rulemaking on the subject.
8. Suburban should be directed to maintain a memorandum account to track the RHP.
IT IS ORDERED that:
1. The settlement agreement between Suburban Water Systems (Suburban) and the Commission's Division of Ratepayer Advocates is approved.
2. Suburban is authorized to increase rates for the years 2009-2011 to the levels it requested as a result of the settlement agreement, as described herein.
3. Suburban shall report in future Advice Letters, as described herein, the activities it undertakes in 2008 and 2009 related to the requirements of the Commission's Water Action Plan.
4. Suburban shall file a formal application within 120 days of the effective date of today's decision to establish a holding company.
5. At this time we decline to approve Suburban's request to recover future costs associated with its Project Cornerstone through an Advice Letter process; however, Suburban may revisit this issue at a later date.
6. Suburban's Residential Houseline Program (RHP) will continue to be considered as excess capacity, pending the results of a future rulemaking on that subject.
7. Suburban shall maintain separate memorandum accounts to track its RHP and Project Cornerstone, pending further direction from the Commission.
8. The Commission shall open a new rulemaking addressing water company affiliate transaction rules and excess capacity issues, as described above.
9. Application 08-01-004 is closed.
This order is effective today.
Dated March 12, 2009, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
