VIII. Metering and Billing
This section discusses three separate but related questions: (1) who are customers of the system; (2) should the applicant be required to acquire and maintain distribution facilities (including individual meters) "downstream" of existing master meters; and (3) how should water service be actually metered and billed to individual users?
A. Existing Customers
A persistent problem has been identifying the actual water users in the Keene system. This problem is largely result of water being delivered and billed to master meters serving the Upper Keene and Lower Keene areas, with incomplete information about who actually uses the water downstream of the master meters. This problem was one of the reasons the Commission refused to grant interim rate relief earlier in this proceeding.
During summer 2005, Stonybrook and Beard conducted a survey of their community to determine the water users on the Keene system. This information was supplied to Union Pacific and, by stipulation, this list of customers was submitted by Union Pacific as late-filed Exhibit No. 6 (Aug. 5, 2005). This list should supersede the list of customers originally set forth in Conclusion of Law 6 of D.02-04-017.
In its briefing, the Water Division points out that D.02-04-017, in determining Keene to be a public utility, required the company to continue providing water to all existing customers as of the commencement of the OII (May 18, 2000) that resulted in the decision. However, as the Water Division observes, "As a practical matter it is not known who was a customer as of the date of the initiation of the OII, nor is it known today." (Water Division Opening Brief at 33 (Sept. 2, 2005).) The Water Division suggests that the Commission's desire to provide continuing service to prior customers can best be achieved by using Exhibit No. 6 as the date by which "all existing customers" will be defined. We agree with this suggestion since Exhibit No. 6 is the product of a recent, collaborative, and systematic effort to identify water users based on the best information available to the parties. Our prior decision should be superseded to now specify that Keene has the obligation to service existing customers as identified in Exhibit No. 6 (Sept. 9, 2005).
B. Facilities Downstream of Master Meters
Keene delivers water to master meters serving residents living in the Upper Keene and Lower Keene areas. The company does not own and has not been responsible for the maintenance of facilities "downstream" of these master meters. It is unclear how many of the households have individual meters or how accurate these meters might be. Keene has billed for water delivered to each of the master meters-not to the individual residents in the Upper Keene and Lower Keene areas. In the past, a resident in each of these communities has volunteered to collect money from neighbors to pay the Keene water bill; but, over time, this practice has become irregular and has resulted in underpayments or no payment at all.
The pertinent questions are whether Keene should assume the ownership and maintenance of water distribution facilities downstream of the master meters, enter into service relationships with individual customers, assume responsibility for reading individual meters, and submit individual bills. Because these steps will add to the water users' costs, the parties explored the possibility of residents continuing to maintain and manage these downstream facilities themselves. This possibility is no longer viable. At the commencement of this proceeding, the Water Division proposed that Keene "immediately install meters for each end user in the system and be responsible for the operation and maintenance of the delivery system all the way to the end user, including the meter." (Water Division Opening Brief at 32.) More recently, Beard indicates, "The [Keene] historic practice of billing only one individual for each of these areas via `master meters' no longer works. No one in Upper Keene or Lower Keene is willing to assume this responsibility because of the lack of authority to disconnect any water user who does not pay for his or her water." (Beard Opening Brief at 6 (Sept. 2, 2005).)
The parties sought to negotiate the details of Keene's assumption of the downstream distribution facilities. Keene and Stonybrook reached an agreement (set forth as Appendix A, Keene Reply Brief (Sept. 21, 2005)) although the other parties have not indicated whether they also agree. The terms and conditions of the Keene-Stonybrook proposal provide a practical and reasonable basis for Keene assuming responsibility for these facilities and they are adopted in this decision with slight modification as to timing:
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6. Each customer in Upper Keene will have its own water meter no later than 180 days following the end of the stay period imposed in Ordering Paragraph 16. If the customer does not install a meter by that date, the company is authorized to do so. All meters will be in place no later than 270 days following the end of the stay period imposed in Ordering Paragraph 16. Keene will bill the individual customers for the meters it installs.1 Each customer will have six months to pay for the customer's meter.
7. Also, no later than 270 days following the end of the stay period imposed in Ordering Paragraph 16, Keene will improve the downstream distribution system. Customers must grant the company the necessary easements.
8. Keene is authorized to file a ratebase offset that reflects the cost of these capital expenditures (except for the water meters paid for by the customers). The company is authorized a 2.39% rate of return on these expenditures (which is acceptable to the Water Division).
9. All these transitional steps are subject to GO 103 and any applicable standards of practice promulgated by the Water Division.
The details of these transitional steps are set forth in the ordering paragraphs.
Another question is how to bill water users in Upper Keene and Lower Keene during this transition. The goal is to bill based on metered service as soon as reasonably possible. Once an accurate, functioning water meter is installed for a customer, Keene is authorized to bill the customer the applicable rates approved in this decision.
One difficulty is in determining water bills for customers until their water meters are installed. Without meters, no method is precise, but a reasonable effort must be made to ensure that unmetered customers pay their fair share. During this interim period, Keene should estimate the quantity of water delivered, for each billing cycle, to unmetered customers downstream of a master meter (calculated as the quantity delivered at the master meter, less the quantity delivered to metered customers downstream of master meter, less a fair proportion of conveyance losses). We authorize Keene to allocate equally the commodity cost of this unmetered water (plus a service charge) to the owners of those separately owned properties receiving water, without meters, during that billing cycle. Before commencing to bill for unmetered water for the first time, Keene shall file an advice letter describing its proposed methodology.
1 During settlement discussions, the Tehachapi-Cummins Water District offered to assist in the acquisition of water meters. Keene and water system customers are encouraged to ascertain whether this assistance is still available.
