Comments
A Proposed Decision in this matter was originally mailed on March 25, 1999, and comments were received.
Because of time elapsed since then, the Commission has decided to again issue this as a Proposed Decision for comments, although the changes from the earlier version are non-substantive.
Following are the comments received on the March 25, 1999 Proposed Decision.
Comments and reply comments on the Proposed Decision of the ALJ were permitted pursuant to the procedures set forth in Article 19 of the Commission's Rules of Practice and Procedure. SJWC filed comments on the Proposed Decision. The Ratepayer Representation Branch (RRB), formerly the LWB, of the Water Division, filed reply comments.
Only one comment of SJWC complies with Rule 77.3. SJWC's other comments either fail to focus on factual, legal or technical errors, fail to make specific reference to the record, or merely reargue positions taken in briefs, in contravention of Rule 77.3, and thus they are accorded no weight, and are not recited here. The relevant comment argues that the proposed 90% disallowance of the amount of IDC capitalized prior to 1996 has no basis in evidence or in the record and is not related to any overcollection. However, as the Proposed Decision notes, Exhibit 21 which was received into the record, is the basis used for determining the disallowance. This Phase 2 of the proceeding was ordered to allow SJWC an opportunity to demonstrate its contention that the ratepayer is neutral to SJWC's use of both CWIP and IDC on CWIP in rate base. SJWC clearly failed to demonstrate that, and SJWC witness Meyer testified that based on further study, he agreed that the ratepayer was not neutral to that practice. Thus the ratepayer had been disadvantaged during that period and a disallowance is appropriate. The proposed disallowance, based on Exhibit 21, is reasonable.
The RRB in its reply comments fully supports the Proposed Decision.
In summary, no changes have been made to the Proposed Decision based on the comments received.
1. Phase 2 of this proceeding was ordered to deal with the treatment of IDC in rate base.
2. SJWC, which was assigned the burden of proof in demonstrating that its treatment of CWIP and IDC in rate base was ratepayer neutral by its adjustment of rate of return, was not able to demonstrate neutrality.
3. The TRA of 1986 did not authorize water companies to use both CWIP and IDC in rate base.
4. D.96-07-036 ordered SJWC to set up a memorandum account to track the difference in revenues collected by SJWC using IDC in rate base, and using both IDC and CWIP in rate base.
5. SJWC, CWS, and LWB entered into a Stipulation in which they agreed on the prospective treatment of CWIP and IDC in rate base.
6. SJWC should reduce its depreciated plant by $690,100 to eliminate the IDC capitalized prior to 1996.
7. Fraud and concealment of information by SJWC are not at issue.
1. The Stipulation should be approved.
2. SJWC should be allowed to record in rate base $69,010 of the amount of IDC.
3. This proceeding should be closed.
IT IS ORDERED that:
1. The Stipulation between San Jose Water Company (SJWC), California Water Service Company, and the Large Water Branch of the Water Division of the Commission, attached as Appendix A is approved.
a. SJWC shall remove Construction Work in Progress (CWIP) in the amount of $1,945,472 from rate base.
b. SJWC shall include Interest During Construction (IDC) in the amount of $160,962 in rate base.
2. SJWC is authorized to place $69,010 of the amount of IDC in plant and to credit its reserve for depreciation by the amount it has depreciated of the $69,010 IDC as of the effective date of this decision.
3. SJWC should reduce its depreciated plant by $690,100 from its rate base for the IDC capitalized prior to 1996.
4. The revenue impact of the decrease in rate base should be transferred to SJWC's balancing account by filing an Advice Letter, and the memorandum account should be closed.
5. SJWC shall file an Advice Letter compliance filing within 30 days of the effective date of this order to demonstrate that it has completed the steps set forth in Ordering Paragraphs 1 and 2.
6. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
(SEE CPUC FORMAL FILES FOR APPENDIX A.)
