3. Summary of the Applications
Addressed in this Decision

3.1. A.08-01-024 (General Office Application)

In this application, Cal-Am asked for Commission authorization to increase the allocation to its Monterey district customers from: (1) the National Service Company, which provides services to a broad range of American Water Company entities across the country, (2) the Local Service Company, which serves all corporate entities in the five western states, and (3) Cal-Corp, which

serves only Cal-Am. The additional revenue sought for these three levels of management was about $5.5 million, or 33% more than current general office levels. Cal-Am stated that about $1.5 million is for business development and retention bonuses at the corporate headquarters level which the Commission has previously rejected as costs properly borne by shareholders, not ratepayers.

3.2. A.08-01-027 (General Rate Case Application)

Cal-Am sought the following increases in general rates for water service in its Monterey District and the Toro Service Area of that District:

	Monterey District
Year	Revenue Increase Over Last Adopted	Percentage Increase Over Last Adopted
2009	$24,718,200	80.30%
2010	$6,503,900	11.72%
2011	$7,598,300	12.25%

Toro Service Area of Monterey District
Year	Revenue Increase Over Last Adopted	Percentage Increase Over Last Adopted
2009	$354,324	114.97%
2010	$25,000	3.77%
2011	$46,500	6.76%

Cal-Am explained in its application that the primary factors leading to the $24 million requested 2009 increase for the Monterey District are: (1) about $61 million increase in rate base, which results in about $8.3 million increase in revenue requirement, (2) purchased water cost increases of over $6 million, (3) payroll and allocated General Office cost of about $5 million and (4) a revenue requirement increase of nearly $1.2 million to offset loss of consumption due to conservation.

Also in that application, Cal-Am made 11 separately stated "special requests" for various costs items and ratemaking treatment. Among these requests are proposals to create a special surcharge to recover certain distribution system capital costs, to move about $65 million of San Clemente dam retrofit costs into rate base, and to establish a memorandum account for Endangered Species Act violation assessments.

Cal-Am subsequently requested permission to withdraw its request to move the San Clemente dam retrofit costs into rate base. Such permission was granted but due to Cal-Am's delay in making the request, other parties incurred unnecessary expense in preparing testimony and, as a condition of its withdrawing the request, Cal-Am reimbursed the parties for their wasted efforts. Cal-Am also withdrew its request Number 1 for an Infrastructure System Replacement Program. Four of the special requests were moved to the conservation docket, A.07-12-010. The remaining five special requests are resolved in the Settlement Agreement on water issues.