VIII. Comments on Proposed Decision

This decision deals with certain issues that were the subject of evidentiary hearings, and other issues that were not the subject of hearings. For purposes of receiving comments, the decision is being issued as a proposed decision under Pub. Util. Code § 311(d).

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1 of the Rules of Practice and Procedure. Comments were filed by Cal-Am, ORA and the District. Joint comments were filed by the County and MCWRA.

Cal-Am supports the Proposed Decision in designating the Commission as Lead Agency under CEQA for the Coastal Water Project, dismissing this proceeding without prejudice, and ordering Cal-Am to immediately file a separate application for the Coastal Water Project. However, it urges (1) that the Commission further address recovery of Carmel River Dam project costs before dismissing this proceeding; (2) that the Commission authorize Cal-Am to charge upcoming Coastal Water Project costs to a deferred debit account with interest greater than the 90-day commercial paper rate, and (3) that prompt preparation of the PEA be reflected in the decision's Conclusions of Law and Ordering Paragraphs.

ORA in its reply comments states that Cal-Am has changed its position on Carmel River Dam project costs and that the treatment proposed mirrors much of ORA's original position. ORA would support Cal-Am's position, with several modifications. However, as discussed in the Proposed Decision, D.03-02-030 adopted the ratemaking treatment specific to Carmel River Dam project costs, and we continue to believe that resolution of these costs can best be dealt with in the utility's next general rate case. Similarly, for the reasons that we have discussed, we believe that the 90-day commercial paper rate for Coastal Water Project costs is fair to the utility and less risky for ratepayers than CWIP or AFUDC treatment at authorized rate of return. We agree with Cal-Am that our directions regarding the PEA should be reflected in the Conclusions of Law and Ordering Paragraphs, and we have revised the Proposed Decision accordingly.

The County and MCWRA urge that the Proposed Decision in its Ordering Paragraphs state that the Commission shall consider the regional nature and aspects of the Coastal Water Project during the environmental review process and, further, that public hearings regarding the project be conducted in Monterey County. As the Proposed Decision makes clear, regional considerations are important, but Cal-Am's primary concern is to obtain 10,730 acre feet of water to serve its service territory and its customers. We see no need to alter the Proposed Decision in this regard. The location of public hearings is a matter yet to be decided, but we will give considerable weight to the recommendations of the County and MCWRA in scheduling these hearings.

ORA supports the major findings of the Proposed Decision, but it urges that Cal-Am not be permitted to book public information costs into a memorandum account for possible recovery in Cal-Am's next general rate case. Cal-Am notes in its reply brief that Cal-Am will have to justify any public information expenditures before it can recover these costs. We believe that establishment of a memorandum account is a reasonable method of dealing with this issue. ORA also urges that the Commission explicitly require Cal-Am to explore possible regional partnerships for development of the Coastal Water Project without regard to whether that exploration is undertaken as part of an environmental review. We believe that objective is implied in the Proposed Decision. Changes in the Ordering Paragraphs are unnecessary.

The District supports the Proposed Decision, but it suggests that the Commission make the District co-lead agency under CEQA. We decline to do that but, as the Proposed Decision notes, we are committed to working closely with the District in carrying out our CEQA responsibilities.