2. Background
Cal Am is a Class A water company with seven districts.2 Class A water companies are regulated by the Commission pursuant to Article XII of the California Constitution and the Public Utilities Code. Specifically, Pub. Util. Code § 455.2, as implemented in the Rate Case Plan (RCP), provides for a GRC proceeding every three years.3
The Coronado District was established in 1886 for the purpose of supplying water to the residents of the area known today as the City of Coronado. American Water Works Company, Inc. (American Water) acquired the company in 1966. Cal Am is a wholly owned subsidiary of American Water.4 The Coronado District serves the Cities of Coronado and Imperial Beach, a portion of the City of San Diego lying south of San Diego Bay and a small area of South Chula Vista located in the County of San Diego. All of the water provided to the Coronado District's approximately 21,000 customers is purchased from the City of San Diego.
The Village Water Company was established to serve land developers in the Conejo Valley. It was acquired by Cal Am in 1967. Between 1970 and 2006 the number of customers in the Village district grew from approximately 7,200 to slightly less than 21,000 with the completion of several new developments in the area. With the increase in customers, the amount and quality of water the district was able to supply to its customers from local wells became inadequate. In 1974 the use of local well water was discontinued. Since then all water provided by the Village District has been purchased from the State Water Project.
On January 22, 2007, Cal Am filed applications for rate increases and/or decreases for its Coronado, Larkfield, Sacramento and Village districts. DRA filed a timely protest on February 21, 2007, and a prehearing conference (PHC) was held on March 23, 2007, in San Francisco. The Mark West Area Community Services Committee (Mark West) filed a Motion to Intervene on March 12, 2007. At the PHC, Mark West's Motion to Intervene was granted and the proceedings were consolidated without objection. Both DRA and Mark West objected to including the consolidation of the Larkfield and Sacramento districts in the scope of the proceeding.
The assigned Commissioner's and Administrative Law Judge's Scoping Memo was issued on April 11, 2007, and included the proposed consolidation of Larkfield and Sacramento. The ruling found that allowing the parties to address the issue is in the public interest, and as such, consolidation is included in the scope of this proceeding.
The Commission held four Public Participation Hearings (PPHs), one each in Thousand Oaks (Village District) and Larkfield, and two in Sacramento, on April 12, 17 and 18, 2007, respectively.5 After the Scoping Memo was issued, DRA filed a Motion to bifurcate the proceeding into two phases and move the Conservation Rate Design, Purchased Water Balancing Account and Water Rate Adjustment Mechanism requests into the second phase of the proceeding. DRA sought the bifurcation because it believed it would be unable to submit its testimony in a timely fashion due to limited staff resources. There was no opposition to the motion. On May 5, 2007, an ALJ Ruling granted DRA's motion and adopted its proposed new schedule.
On April 13, 2007, Cal Am filed Supplemental Testimony of Rodney Jordan and removed the Sutter Well and Well Number 6 from the Larkfield District application. Direct testimony was filed by DRA and Mark West on May 2, 2007. Cal Am filed its rebuttal testimony on May 21, 2007. Evidentiary hearings were held June 4-6, 2007, with Opening and Reply Briefs filed on June 28, 2007, and July 3, 2007, respectively.
DRA and Cal Am filed a settlement agreement on July 6, 2007. On July 20, 2007, Mark West filed Comments on the settlement agreement. On August 20, 2007, both DRA and Cal Am filed replies to Mark West's comments on the settlement agreement.
On October 2, 2007, Cal Am filed a motion to reopen the record to accept late-filed exhibits which corrected errors in the comparison tables attached to the settlement agreement. On November 2, 2007, Cal Am filed a motion for interim rate relief. An ALJ ruling issued on November 20, 2007, granted both motions.
Parties also contacted the ALJ seeking a delay in the start of Phase II of the proceeding since settlement negotiations in the Los Angeles GRC would likely affect the rate design portion of this proceeding. The ALJ agreed to the delay and the start of Phase II is still pending a settlement in the Los Angeles case.
2 A Class A water company is a privately held water company with over 10,000 service connections. Cal Am's seven districts are Coronado, Felton, Larkfield, Los Angeles, Monterey, Sacramento, and Village.
3 The original RCP was adopted in D.04-06-018. On May 24, 2007, the Commission issued D.07-05-062, revising the original RCP to among other things, adopt a rate case cycle that ultimately has each utility filing its rate cases for all districts at the same time.
4 The Coronado and Village Districts were both acquired by American Water, but for operating purposes they are part of Cal Am, a wholly owned subsidiary of American Water.
5 There were two PPHs in Sacramento, one in the afternoon and one in the evening.
