ALJ/GW2/avs Date of Issuance 2/23/2012

Decision 12-02-023 February 16, 2012

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Lucas D. Hernandez, Martha Amezquita, Daniel Gonzalez, Gabriel Cabrera, Severo Rosa, Celia Ruiz, Martha Alvarado, Maria Palma, Federico Garcia, Luis Morales,

Complainants,

vs.
Sunbird Mobile Home Park, Hawkeye Asset Management, James Martin and Betty Martin,
Defendants.

Case 09-11-019
(Filed November 25, 2009)

DECISION SETTING MOBILHOME PARK WATER RATES AND CONDITIONS OF WATER SERVICE, AND MANDATING RELATED ACCOUNTS

TABLE OF CONTENTS

Title Page

DECISION SETTING MOBILHOME PARK WATER RATES AND CONDITIONS OF WATER SERVICE, AND MANDATING RELATED ACCOUNTS 2 2

1. Summary 2 2

2. Background 3 3

3. Issues Presented 9 9

4. Staff Report and Positions of the Parties 10 10

4.1. Background and Highlights of Staff Report 10 10

4.2. Recommendations of Staff Report 11 11

4.3. Parties' Responses to Staff Report and Arguments on the Merits 12 12

4.3.1. Relevance of Septic System Constraints and Expenses 12 12

4.3.2. Rate Design 14 14

4.3.3. Water Quality 19 19

5. Analysis and Resolution of Issues 21 21

5.1. Preponderance of Evidence Standard of Proof 21 21

5.2. Inapplicability of Certain Policies Pertaining to Water Corporations 22 22

5.3. Limited Relevance of Septic System Evidence 23 23

5.3.1. Adoption of Tiered Rates 23 23

5.3.2. Identification of Expenses and Revenues for Ratesetting 24 24

5.4. Revenue Requirement 26 26

5.4.1. Application of Rate of Margin Methodology 26 26

5.4.2. Regulatory Expenses 27 27

5.4.3. Management Expenses 29 29

5.4.4. Water Testing 29 29

5.4.5. Meter Reading 31 31

5.4.6. Taxes (Other Than Income) 31 31

5.4.7. Depreciation 32 32

5.4.8. Revenue Allocation 32 32

5.4.9. Revenue Requirements for 2010, 2011, and 2012 33 33

5.5. Rate Design and Rates 33 33

5.5.1. Monthly Service Charge 33 33

5.5.2. Tiered Quantity Charge 34 34

5.5.3. Sunbird Water Rates Once This Decision Takes
Effect Compared to Previous Water Rates 35 35

5.5.4. Effect on Average Monthly Water Bill 35 35

5.5.5. Summary of Rate-Related Findings 35 35

Title Page

5.6. Adjustments and Balancing Account 37 37

5.6.1. Revenues Not Billed as a Result of D.10-05-020 37 37

5.6.2. Balancing Accounts for 2012 38 38

5.7. Restitution Claim 38 38

5.8. Water Quality 40 40

5.8.1. Partial Settlement Agreement 40 40

5.8.2. Planned Connection to Coachella Valley Water District 41 41

5.8.3. Water Quality Conditions Pending the Connection 41 41

6. Comments on Proposed Decision 42 42

7. Assignment of Proceeding 43 43

Findings of Fact 44 44

Conclusions of Law 46 46

ORDER 47 47

Resumen 1 1

ATTACHMENT A - Partial Settlement and Mutual Release Agreement.

ATTACHMENT B - Spanish Executive Summary

DECISION SETTING MOBILHOME PARK WATER RATES AND CONDITIONS OF WATER SERVICE, AND MANDATING RELATED ACCOUNTS

1. Summary

This ratesetting decision substitutes just and reasonable water rates at the 87-space Sunbird Mobile Home Park in Thermal, California, for ones that were not just and reasonable. Under the new rates, residents will pay monthly $0.90 per hundred cubic feet (one unit) for the first 10 units of water consumed, and $1.30 per unit for all units consumed above that, in addition to a service fee of $7.25 in 2011 and $6.00 in 2012. Under the rate design and rates ordered in this decision, the average monthly bill per estimated billed connection for 2011 and 2012 is projected to be $13.96 and $12.71 (less an estimated refund of approximately $6.19 for 2012), respectively, compared to $23.74 in 2010. Two tiers of rates, rather than the previous four, are established with a 44.44% differential between the first and second tiers.

The earlier interim decision, Decision (D). 10-05-020, in this proceeding suspended the application of Tier 3 and Tier 4 rates, providing for a later adjustment if the suspension resulted in either an undercollection or an overcollection of the revenue requirement that would be determined later. That adjustment in rates resulted in an overcollection of $495 from ratepayers based on collections for 2010 and 2011.¹ This decision authorizes Sunbird Mobile Home Park to refund each submetered connection in a monthly water bill in 2012 a sufficient amount to refund in the aggregate that amount.

Sunbird Mobile Home Park is directed to reconcile the actual operating expenses and revenues for 2011, carrying forward the net amount into 2012, and to establish a balancing account for 2012 to record actual operating expenses and revenues consistent with this decision. It is directed to file a letter with the Director of the Commission's Division of Water and Audit, at the end of 2012, or upon the completion of the connection to the District, whichever occurs first, requesting an adjustment for over or under collections in accordance with actual operating expenses and revenues for 2010, 2011 and 2012.

The claim for restitution for excessive payments made before the filing of the formal complaint is denied because the Commission lacks authority to grant such relief under the applicable statute. Today's decision approves a partial settlement agreement between the parties, appended as Attachment A, that addresses tainted water problems pending the planned connection, expected during 2012, of the mobile home park to a public water supply that is compliant with safe drinking water standards.

This decision supersedes the earlier interim decision, D.10-05-020, and closes the proceeding. Excerpts of the decision are translated into Spanish and appended as Attachment B.

¹ The net overcollection is based on an estimated overcollection of $1,807 for 2010 and an undercollection of $1,302 for 2011.