COM/SK1/ham
MAILED 05/11/2004
Decision 04-05-023 May 6, 2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of the California-American Water Company (U210W) for an Order Authorizing it to Increase its Rates for Water Service in its Sacramento District to Increase Revenues by $8,198,700 in the Year 2003; and $1,955,000 in the Year 2004. |
Application 02-09-030 (Filed September 19, 2002 |
|
And Related Matters. |
Application 02-09-031 (Filed September 19, 2002) Application 02-09-032 (Filed September 19, 2002) Application 02-09-033 (Filed September 19, 2002) |
Lenard G. Weiss, Attorney at Law, for California-American Water Company, applicant.
Carol Dumond, Attorney at Law, and Raymond A. Charvez, for the Commission's Office of Ratepayer Advocates, protestant.
Edward W. O'Neill, Attorney at Law, for County of Santa Cruz, and Montara Sanitary District; Jeff Almquist, Attorney at Law, for County of Santa Cruz, El Solyo Associates, and himself; interested parties.
OPINION ON GENERAL RATE CASE
TABLE OF CONTENTS
Title Page
Summary 2
Background 2
Discussion 5
The Partial Settlement 5
Settlement Terms 6
Settlement Discussion 6
Summary of Earnings 9
Operating Revenues 9
Operation and Maintenance Expenses 9
Administrative and General Expenses 11
Rate Base - Plant in Service 15
Security-Related Plant Additions 15
Contamination-Related Projects 17
Flat to Metered Conversion Project 21
Rate Base - Other Components 23
Taxes 23
General Office 23
Acquisition Synergies 24
Special Rate Requests 30
Special Rate Request #1 30
Special Rate Request #2 31
Special Rate Request #3 35
Special Rate Request #4 36
Special Rate Request #5 36
Special Rate Requests #6 and #7 37
Cost of Capital 43
Capital Structure 43
Cost of Debt 43
Cost of Equity 44
CalAm's Recommended Return on Equity 45
ORA's Recommended Return on Equity 46
Santa Cruz's Recommended Return on Equity 47
Return on Equity Discussion 48
Rate of Return on Rate Base 56
Step Rate Increase Filings 57
Rate Design 59
Service Quality 60
Almquist's Issues 62
Comments on Proposed Decision and Alternate Proposed Decision 65
Assignment of Proceeding 68
Findings of Fact 68
Conclusions of Law 69
ORDER 70
TERRITORY 11
RATES Per Meter 11
NOTICE 10
Appendix A Adopted Summaries of Earnings
Appendix B Authorized Tariffs
Appendix C Authorized Step Rate Increases
Appendix D Adopted Quantities and Calculations
Appendix E Bill Comparisons
Appendix F Adopted Settlement
Summary
This decision approves a partial settlement agreement between California American Water Company (CalAm) and the Commission's Division of Ratepayer Advocates (ORA), and grants CalAm test year 2003 and test year 2004 rate increases of $254,700 (34.6%) and $70,800 (7.1%) in Felton district, $327,700 (21.1%) and $58,200 (3.1%) in Larkfield district, and $5,487,200 (33.9%) and $816,000 (3.7%) in Sacramento district. CalAm may file the test year 2003 increases immediately; the 2004 increases are deferred to 2005 in accordance with the Commission's earlier order approving CalAm's acquisition by RWE Aktiengesellschaft, Thames Water Acqua Holdings GmbH (RWE). CalAm may file advice letters seeking additional increases in Sacramento district to recover amounts in its purchased power balancing and memorandum accounts, and expenses associated with its start up costs for surface water procurement from Placer County Water Agency. CalAm's requests to combine for ratemaking purposes Larkfield district with Sacramento district, and Montara and Felton districts with Monterey district, are denied. CalAm's request to withdraw Application (A.) 02-09-033, its Montara district general rate case (GRC), is granted.
