V. Water Sales and Operating Revenues

A. Service Connections

San Gabriel forecasts an increase of 1,000 residential connections per year based on a seven-year average. ORA estimates increases of 1,410 and 1,336 connections for Test Year 2003 and 2004, respectively, based on a trending methodology. We find that San Gabriel's estimate is low because it gives too much weight to earlier lower growth years, and ORA's estimate is high given recent recorded growth rates. We adopt the five-year average of 1,298 new connections per year as fairly representing expected residential growth during the test years and attrition years.

San Gabriel's and ORA's estimates of service connections for all classes, other than residential, are essentially the same except for minor differences in the Public Authority classes. We adopt San Gabriel's estimates since, apparently, ORA double-counted two large customers.

B. Average Use Per Customer

San Gabriel's forecast of average residential customer usage is 321 Ccf/year based on the Modified Bean Method, a multiple regression analysis which eliminates variations due to time, rainfall and temperature. ORA's revised estimate, 336.5 Ccf/year, approximates the four-year recorded average. Fontana Division has experienced four drought years, and ORA's estimate is not "weather normalized" for test year ratemaking purposes. Therefore, we adopt San Gabriel's estimate of 321 Ccf/year for residential usage. Likewise, we will adopt San Gabriel's estimates for all other classes since these estimates are also weather normalized.

C. Miscellaneous and Construction Revenues

ORA's estimate of Miscellaneous Revenues is $531,751 for 2003 and $447,271 for 2004. San Gabriel's estimate is $106,881 for 2003 and 2004. ORA used a five-year average to estimate Account 611 (Miscellaneous Service Revenues) and included estimated revenues for reimbursement of operating costs of a contaminated well from the San Bernardino County Board of Supervisors. San Gabriel's estimate is based on recorded 2001. We adopt San Gabriel's estimate since ORA did not include the corresponding expenses for operating the contaminated well.

For Construction Revenues, ORA estimates revenues of $608,194, and San Gabriel estimates $326,008 for each test year. ORA's estimate is based on recorded 2002, which it contends more closely reflects the current level of construction activity in this region of continuing growth and development. San Gabriel used a five-year average from 1997 through 2001. We adopt ORA's estimate since San Gabriel's five-year average does not adequately reflect current construction levels.