Interim Rate Relief Request
By way of its motion GSWC seeks authorization to implement two surcharges - one for BVES' domestic low-income customers and one for BVES' remaining customers - to allow for full cost recovery of BVES' share of GSWC's GO costs. The surcharge for residential customers eligible for the CARE program and taking service under BVES tariff schedule DLI (Domestic Low Income) would be $.01207/kWh. The surcharge for BVES' remaining customers would be $.01519/kWh. These proposed surcharges are intended to allow recovery of the difference between the level of GO costs currently reflected in BVES' rates and the level of GO costs allocated to BVES in D.07-11-037. GSWC argues both that the Commission has the authority to grant the requested interim rate relief, and that interim relief is warranted under the present circumstances.2 Specifically, GSWC claims that interim relief is fair, will help prevent rate shock, will ensure that those responsible for costs bear those costs, and will take into account the fact that BVES is and has been earning well below its last authorized rate of return (ROR).
Both DRA and the City oppose GSWC's request. In particular, DRA argues that granting interim rate relief presupposes both that there will be a significant rate increase and that GSWC has the best proposal for reducing rate shock. DRA also notes that BVES, by its failure to seek rate adjustments in a timely fashion, is responsible for any potential rate shock. The City contends that GSWC's proposal is unfair, that BVES won't be harmed by deferring a rate increase until the decision issues, that rate shock can be mitigated by other rate impact mitigation measures, and that providing interim relief now would break up the GRC in a piecemeal fashion.
Both DRA and the City argue that BVES lacks precedent for its request. DRA distinguishes the facts presented in D.03-12-057, upon which GSWC relies, from those presently at hand by pointing out that in D.03-12-057:
[T]he Applicants filed their GRC in December 2002 for a decision in 2003 and implementation in 2004. In early 2003, the Office of Ratepayer Advocates ... [DRA] requested additional time to respond to the Application, and the Commission granted [DRA's] request. The ... parties then requested an 80% interim rate relief to be effective in the latter part of 2003, arguing that an under collection of rates due to a delay in the GRC proceeding would send the wrong price signals and likely cause a "rate shock" when all the rates become due after the GRC decision.
(Response of DRA to the Motion of Golden State Water Company for an Interim Rate Increase, at 4-5.) The City likewise distinguishes the precedent relied upon by GSWC. First, the City notes that in Toward Utility Rate Normalization v. Public Utilities Commission, 44 Cal.3d 870 (1988) "the overriding circumstance was the prospect of many months and years of hearings and deliberations before the reasonableness and prudency of the many items of cost ... could be finally determined." (Response to Golden State Water Company's Motion for Interim Rate Increase, at 1.) The City also points out that in In the Matter of the Application of the Southern California Edison Company (U 338-E) (D.88-05-074) 1988 Cal.
LEXIS 503, upon which GSWC also relies, "the proceeding had encountered a history of delays ... which would require evidentiary development and briefing and the bifurcation of the proceeding into two phases each of which required hearings." (Response to Golden State Water Company's Motion for Interim Rate Increase, at 1.)
The fact that BVES has gone a long time without an adjustment to its rates does not, by itself, establish the type of exigent circumstances that usually give rise to interim relief. This is especially true where, as is presently the case, it appears that the applicant could have raised the issue in a more timely fashion. Moreover, the fact that the proceeding is on pace with the schedule set forth in the January 16, 2009, Scoping Memo and Ruling of Assigned Commissioner and there is nothing to suggest that there will be any unexpected delays, argue persuasively against our granting GSWC's motion for interim rate relief.
Memorandum Account Request
As an alternative to interim rate relief, GSWC seeks authorization to track the difference between general office costs that are currently being collected and BVES' currently authorized GO allocation in a memorandum account. This Commission has a clearly established practice of establishing memorandum accounts to allow GRC case decisions delayed past the start of the test year to be effective as if the decisions had not been delayed, notwithstanding the general rule against retroactive ratemaking. Such memorandum accounts were implemented in the last GRC for each of the major California energy utilities. For example, in D.06-10-033, this Commission authorized a memorandum account to leave shareholders and ratepayers essentially indifferent to the actual future date of the delayed GRC decision that would authorize Pacific Gas and Electric Company's test year 2007 revenue requirement. Similarly, in
D.06-01-020, the Commission granted Southern California Edison Company a memorandum account to track costs because the eventual decision had been delayed in that proceeding. Finally, in San Diego Gas & Electric Company and Southern California Gas Company's last consolidated GRC, Application
(A.) 06-12-009/A.06-12-010, the Commission issued D.07-12-053, which authorized a memorandum account to track the eventual outcome of the final decision (subsequently issued in August 2008) back to the start of the test year, January 1, 2008.3
As was the case in the proceedings above, GSWC's anticipated GRC decision date of no earlier than July 31, 2009, comes well after the 2009 test year start. Moreover, because it will track only the increased GO allocation costs for BVES, which have been effective since November 2007, the requested memorandum treatment will leave both ratepayers and shareholders essentially indifferent to the precise date of the final decision, remove any incentives for any party to seek or promote delay, and allow sufficient time for review and critical analysis of the record. We therefore think it appropriate to allow GSWC to track the difference between GO costs currently being collected and the GO costs allocated to BVES in D.07-11-037 on a prospective basis.4 To the extent needed, the disposition of the memorandum account will be addressed in the final decision.
2 Citing Toward Utility Rate Normalization v. Public Utilities Commission, 44 Cal.3d 870 (1988), In the Matter of the Application of the Southern California Edison Company (U 338-E) (D.88-05-074) 1988 Cal. LEXIS 503, and D.03-12-057.
3 Due to the circumstances of the proceeding, when revenue requirement adjustments would be effective was left open.
4 Due to retroactive ratemaking considerations, the proposed memorandum accounts can neither become effective nor reflect D.07-11-037's revised BVES general office costs, prior to the date of this decision.
