D0802036/I0701022 et al. Appendix A (Service List)

ALJ/JLG/sid Date of Issuance 2/29/2008

Decision 08-02-036 February 28, 2008

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation to Consider Policies to Achieve the Commission's Conservation Objectives for Class A Water Utilities.

Investigation 07-01-022
(Filed January 11, 2007)

In the Matter of the Application of Golden State Water Company (U 133 E) for Authority to Implement Changes in Ratesetting Mechanisms and Reallocation of Rates.

Application 06-09-006
(Filed September 6, 2006)

Application of California Water Service Company (U 60 W), a California Corporation, requesting an order from the California Public Utilities Commission Authorizing Applicant to Establish a Water Revenue Balancing Account, a Conservation Memorandum Account, and Implement Increasing Block Rates.

Application 06-10-026
(Filed October 23, 2006)

Application of Park Water Company (U 314 W) for Authority to Implement a Water Revenue Adjustment Mechanism, Increasing Block Rate Design and a Conservation Memorandum Account.

Application 06-11-009
(Filed November 20, 2006)

Application of Suburban Water Systems (U 339 W) for Authorization to Implement a Low Income Assistance Program, an Increasing Block Rate Design, and a Water Revenue Adjustment Mechanism.

Application 06-11-010
(Filed November 22, 2006)

Application of San Jose Water Company (U 168 W) for an Order Approving its Proposal to Implement the Objectives of the Water Action Plan.

Application 07-03-019
(Filed March 19, 2007)

(See Appendix A for a list of appearances.)

OPINION RESOLVING PHASE 1A SETTLEMENT

AGREEMENTS AND CONTESTED ISSUES

TABLE OF CONTENTS

Title Page

OPINION RESOLVING PHASE 1A SETTLEMENT 2

AGREEMENTS AND CONTESTED ISSUES 2

1. Background and Summary 2

2. Objection to Scope of Phase 1 6

3. Alternate Conservation Rate Design Proposal 8

4. Conservation Goal for Class A Water Utilities 10

5. Standard for Reviewing Settlements 13

6. CalWater, Suburban, and Park Conservation Rate
Design Proposals 13

6.1. CalWater Amended Settlement 14

6.2. Suburban Settlement 20

6.3. Park Settlement 23

7. WRAMs and MCBAs 25

7.1. Suburban 25

7.2. CalWater and Park 25

8. Adoption of Conservation Rate Design and WRAM Settlement Agreements 28

9. Suburban's Low-Income Rate Assistance Program Settlement 30

10. Suburban's Customer Outreach and Education, Data Collection, and Reporting Settlement 33

10.1. Customer Outreach and Education 33

10.2. Data Collection and Reporting 34

10.3. Applicability to CalWater and Park 36

11. Park's Data Collection Settlement 38

11.1. Data Collection and Reporting 39

11.2. Memorandum Account Treatment 40

12. Park's Conservation Memorandum Account Settlement 40

13. Suburban's ROE Settlement 41

14. Suburban and DisabRA Memorandum of Understanding
on Access Issues 42

15. Suburban's Memorandum Account Proposal 43

16. Implementation of Conservation Rate Design Settlements 47

17. Requests for Compensation 48

18. Comments on Proposed Decision 48

19. Assignment of Proceeding 49

Findings of Fact 49

Conclusions of Law 54

ORDER 55

APPENDIX A - List of Appearances

OPINION RESOLVING PHASE 1A SETTLEMENT

AGREEMENTS AND CONTESTED ISSUES

In today's decision, the first of two Phase 1 decisions, we adopt eight settlements on conservation rates, revenue adjustment mechanisms, modified cost balancing accounts, return on equity (ROE) adjustment, a low-income assistance program, customer education and outreach, and data collection and reporting. We also approve a conservation memorandum account for extraordinary legal and regulatory expenses and endorse the parties' efforts to resolve access for customers with disabilities in light of the adoption of conservation rate designs.

1. Background and Summary

The Commission opened this investigation to address policies to achieve its conservation objectives for Class A water utilities and ordered the consolidation of four pending conservation rate design applications-Application (A.) 06-09-006 (Golden State Water Company (Golden State)), A.06-10-026 (California Water Service Company (CalWater)), A.06-11-009 (Park Water Company (Park)), and A.06-11-010 (Suburban Water Systems (Suburban)).¹ Those objectives include adoption of conservation rate designs and revenue adjustment mechanisms that decouple sales from revenues. Parties filed responses to the preliminary scoping memo on January 29, 2007, and a prehearing conference (PHC) was held on February 7, 2007. A second PHC was held on July 11, 2007. The first phase of this proceeding addresses rate-related conservation measures, including the parties' increasing block rate and water revenue adjustment mechanism (WRAM) proposals.

The Phase 1 scoping memo issued on March 8, 2007. The Scoping Memo defined Phase 1 to include rate-related conservation measures, WRAMs and Suburban's proposed low-income assistance program. By a May 29, 2007 ruling, the conservation rate design application of San Jose Water Company was consolidated with this application. Phase 1 was divided into Phases 1A and 1B; the issue of return on equity adjustment for adoption of WRAMs was deferred to Phase 1B. From July 30 to August 2, 2007, Phase 1A hearings were held on contested issues raised by the parties on the settlement agreements and Suburban's proposed memorandum account. Opening and reply briefs were filed on August 27, 2007 and September 17, 2007, respectively.

The settlement agreements addressed in this decision were filed before and after the Phase 1A hearings, as follows:²

· Suburban/Division of Ratepayer Advocates (DRA) on conservation rate design trial program on April 24, 2007;

· Suburban/DRA on low-income ratepayer assistance program (LIRA) on April 24, 2007;

· Park/DRA on conservation rate design, WRAM, and modified cost balancing account (MCBA) trial program on June 15, 2007;

· CalWater/DRA/TURN on conservation rate design (amended settlement), WRAM, and MCBA trial program on June 15, 2007;

· Park/DRA on conservation memorandum account on July 30, 2007;

· Suburban/Joint Consumers³ on customer outreach and education and data collection and reporting on August 10, 2007; and

· Park/Joint Consumers/Consumer Federation of California (CFC) on data collection, monitoring, and reporting on August 10, 2007.

In addition, a memorandum of understanding was reached between Suburban and DisabRA on disability access issues in July 2007. DRA and Suburban filed a settlement agreement on the ROE adjustment on October 19, 2007, after Phase 1A was submitted on the filing of reply briefs. DRA and Suburban requested that we address the ROE settlement in this Phase 1A decision, rather than in the Phase 1B decision. No party opposed the settlement or the proposal to address the settlement in this decision. Thus, we set aside submission to resolve the Suburban/DRA ROE settlement herein.

CFC opposed, for policy reasons, adoption of the three conservation rate design settlements and the CalWater and Park WRAM settlements. The Joint Consumers opposed the Suburban LIRA settlement, which adopts a flat-rate discount of the service charge. Hearings were held on these contested settlements. Suburban's conservation memorandum account proposal was not resolved by settlement and was addressed in this phase's hearings.⁴

The conservation rate design settlements propose trial programs, which will remain in effect until the company's next general rate case (GRC). Prior to addressing the settlement agreements, we address CFC's procedural and policy concerns and adopt the goal of a targeted reduction in consumption for Class A water utilities with price and non-price conservation programs and a tentative targeted reduction for the trial programs. We then address the settlements and the Suburban conservation memorandum account and memorandum of understanding on access for persons with disabilities. We approve the following settlements:

· Suburban/DRA on conservation rate design;

· Suburban/DRA on LIRA program;

· Park/DRA on conservation rate design, WRAM, and MCBA;

· CalWater/DRA/TURN on conservation rate design, WRAM, and MCBA;

· Park/DRA on conservation memorandum account;

· Suburban/Joint Consumers on customer outreach and education and data collection and reporting;

· Park/Joint Consumers/CFC on data collection, monitoring, and reporting; and

· Suburban/DRA on ROE adjustment.

We authorize Suburban and the other Class A water utilities to establish memorandum accounts to track the legal and related costs of participating in this proceeding; we limit such authorization to the circumstances of this proceeding. We will not authorize Suburban to track in its memorandum account expenses incurred between the issuance of Decision (D.) 06-08-017 and the issuance of this order instituting investigation (OII).

¹ A January 16, 2007 ruling affirmed consolidation of the applications with the OII.

² The settlement agreements were e-filed with the Commission. The provisions of the settlements are summarized infra. The settlements can be obtained on the Commission's website under the index of currently opened proceedings.

³ The Joint Consumers are The Utility Reform Network (TURN), the National Consumer Law Center (NCLC), Disability Rights Advocates (DisabRA), and Latino Issues Forum (LIF).

⁴ CalWater's conservation memorandum increase proposal is addressed in Phase 1B.

Order Instituting Investigation to Consider Policies to Achieve the Commission's Conservation Objectives for Class A Water Utilities.	Investigation 07-01-022 (Filed January 11, 2007)
In the Matter of the Application of Golden State Water Company (U 133 E) for Authority to Implement Changes in Ratesetting Mechanisms and Reallocation of Rates.	Application 06-09-006 (Filed September 6, 2006)
Application of California Water Service Company (U 60 W), a California Corporation, requesting an order from the California Public Utilities Commission Authorizing Applicant to Establish a Water Revenue Balancing Account, a Conservation Memorandum Account, and Implement Increasing Block Rates.	Application 06-10-026 (Filed October 23, 2006)
Application of Park Water Company (U 314 W) for Authority to Implement a Water Revenue Adjustment Mechanism, Increasing Block Rate Design and a Conservation Memorandum Account.	Application 06-11-009 (Filed November 20, 2006)
Application of Suburban Water Systems (U 339 W) for Authorization to Implement a Low Income Assistance Program, an Increasing Block Rate Design, and a Water Revenue Adjustment Mechanism.	Application 06-11-010 (Filed November 22, 2006)
Application of San Jose Water Company (U 168 W) for an Order Approving its Proposal to Implement the Objectives of the Water Action Plan.	Application 07-03-019 (Filed March 19, 2007)