COM/JB2/hl2 Mailed 5/30/2007

Decision 07-05-062 May 24, 2007

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Consider Revisions to the General Rate Case Plan For Class A Water Companies.

Rulemaking 06-12-016
(Filed December 14, 2006)

OPINION ADOPTING REVISED RATE CASE PLAN
FOR CLASS A WATER UTILITIES

TABLE OF CONTENTS

Title Page

OPINION ADOPTING REVISED RATE CASE PLAN FOR
CLASS A WATER UTILITIES 2 2

I. Summary 2 2

II. Background 3 3

III. Modifications to the Existing Rate Case Plan 5 5

A. Single Rate Case for Multi-District Utilities 5 5

1. Rate Adjustments During RCP Transition Period 10 10

2. GO Review During RCP Transition Period 11 11

3. Updates to Recorded Information in Pending GRC Application 12 12

B. Cost of Capital Proceedings 13 13

C. Interim Rate Relief during a Pending GRC 16 16

D. Rate Case Plan Waivers 20 20

E. Minimum Data Requirements 21 21

F. Notice of Rate Increases for Utilities with Bimonthly Billing 23 23

G. Addition of Technical Conference 24 24

H. Water Quality Review 24 24

I. Reduction of Unaccounted Water 26 26

J. Alternative Dispute Resolution 28 28

IV. Workshop 29 29

V. Categorization and Need for Hearing 29 29

VI. Comments on Proposed Decision 30 30

VII. Assignment of Proceeding 30 30

Findings of Fact 30 30

Conclusions of Law 31 31

ORDER 32

APPENDIX A: Rate Case Plan and Miminum Data Requirements

OPINION ADOPTING REVISED RATE CASE PLAN
FOR CLASS A WATER UTILITIES

I. Summary

Today, we adopt several significant changes to the Rate Case Plan (RCP) for Class A water utilities¹ approved in Decision (D.) 04-06-018. We adopt a new schedule for filing general rate cases (GRCs). Under our new schedule, multi-district water utilities will be required to eventually file a single GRC for all districts at the same time. The transition to this new schedule will be gradual.

We also require separate applications for cost of capital determinations. We will require Class A water utilities to file cost of capital applications on a triennial basis, and we will adopt an adjustment mechanism for the intervening years in the first applicable cost of capital proceedings under this RCP. The largest multi-district Class A water utilities will file their first cost of capital applications in May 2008. The remaining Class A water utilities will file their first cost of capital applications in May 2009. All of the cost of capital applications filed in the same year will be consolidated.

To reduce discovery during GRC proceedings, we adopt Minimum Data Requirements (MDRs) to be completed by the utility as part of its GRC testimony and its cost of capital testimony. We also adopt several modifications to the existing RCP processing schedule for GRCs. The timing for Public Participation Hearings (PPHs) is modified to accommodate notice requirements for companies with bimonthly billing. We also modify the existing RCP processing schedule by incorporating Alternative Dispute Resolution (ADR) to assist parties in narrowing the disputed issues and by adding a technical conference about the utility's models to ensure that these models are properly understood and usable.

Our new RCP also improves our oversight of water quality by requiring utilities to provide us with water quality data through the MDRs and by authorizing the assigned Commissioner or assigned Administrative Law Judge (ALJ) to appoint a water quality expert to offer testimony in any GRC proceeding. We considered whether to require utilities to comply with an unaccounted water standard under consideration by the California Urban Water Conservation Council (CUWCC). While we adopt some minor changes in this area, we will not require any major changes until after the CUWCC completes its review process of Best Management Practice 3 (BMP 3).

Finally, we adopt a new procedure for utilities to obtain interim rate relief while a GRC is pending and, for the first time, we adopt a procedure for Class A water utilities to obtain waivers to the requirements to file a GRC application and to file every three-years. Our new RCP permits utilities to waive or delay the triennial filing requirement with consent of the Executive Director, in consultation with Water Division, and to obtain authority, in certain instances, to file a GRC by advice letter.

¹ Class A water utilities are those companies with more than 10,000 service connections. Unless otherwise noted, all requirements of this decision only apply to Class A water utilities.