V. Comments on Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7. Comments and reply comments were filed on the first draft decision. A revised draft decision was mailed on May 4, 2004, and the parties filed comments on May 17, 2004. Many comments requested corrections and editorial changes have been incorporated into the text of the decision, other issues are addressed below.

San Gabriel contends that 15 days is insufficient time between the filing of ORA's reports and utility rebuttal testimony. Fifteen days, however, is a five-day increase from the current 10-day interval. San Gabriel also states that 20 days from the end of hearings to initial briefs is insufficient. The ALJ will set the briefing schedule at the end of hearings when the issues that require briefing will be known and can make any required adjustments to the schedule at that time.

San Gabriel also sought clarification as to whether General Office would be counted as a separate district to scheduling purposes. (The schedule differs based on number of districts filed.) The decision has been revised to clarify that General Office does not formally count as a district but we note that practical workload issues may require scheduling accommodations.

Several parties object to using inflation-based escalation rates for liability insurance, medical insurance, and pensions. These parties, including Park Water, San Gabriel, and Cal Am, contend that these three items are increasing at rates in excess of inflation and that item specific escalation rates should be used. Park and Cal Water Association contend that such rates may be available from the U.S. Bureau of Labor Statistics.¹⁴ The U.S. Bureau of Labor Statistics rates, however, have not been thoroughly vetted in this proceeding thus far. Any party that wishes to propose a specific index for our consideration should do so in Phase II of this proceeding. Pending such an alternative, we will retain the inflation-based index.

The parties also noted that the proposed application due date for July 2004 filing utilities has passed. To accommodate the transitional scheduling, the July 2004 filers will submit their proposed applications on July 15, with the final application following on September 1.¹⁵ January 2005 filers will submit their proposed applications on December 1, 2004, and the final application will be due on February 1, 2005. The parties are encouraged to prepare complete documents with all needed supporting materials and to cooperate in processing these initial cases on this expedited basis.

Cal Water Association contends that requiring a utility to file a motion for an interim rate increase, with a subsequent Commission decision, is contrary to the legislative intent behind § 455.2. The plain words of § 455.2, however, require that the Commission decide whether the delay in the rate case was "due to actions by the water corporation" and whether an interim rate increase of less than the rate of inflation is "in the public interest." These determinations are best made in an interim Commission decision in the rate case docket. This will ensure that the Commission has the full rate case evidentiary record available for its decision.

Cal Water Association and ORA offered a late proposal to use a calendar year test year for both January and July filers. Because rates for July filers would not be effective for the entire test year, the parties proposed a surcharge to allow the July filing utilities to recover the extra half year increase. This proposal, however, fails to have rates in place on "the first day of the first test year" as required by § 455.2, and we do not adopt it.