2. Description of Proceeding
This consolidated proceeding resolves applications for rate increases in 15 out of the 24 districts in which Cal Water provides water service, and will affect water rates for 286,689 customers. The 15 districts are located throughout most of the state - from East Los Angeles to Chico - and present different service challenges to Cal Water. For example, the King City District has experienced significant customer growth, while the Stockton District's most pressing issue is decontaminating wells. The various districts also have different regulatory histories before the Commission. Some districts, such as Bear Gulch, have relatively recently (2000) been through a general rate case with resulting test year data. Other districts, such as Mid-Peninsula, have not been through a general rate case since test year 1994. Consequently, each district must be looked at individually to evaluate the proposed rate increases.
In addition to district-specific items, each district is allocated a share of Cal Water's general office costs. These are the costs associated with Cal Water's headquarters, where the operational functions of accounting, engineering, water quality control, purchasing/stores, and customer billing are performed. Administrative and general (A&G) functions are also performed at the headquarters.
In the Rate Case Plan1, the Commission set a three-year schedule for the larger regulated water utilities to make general rate case filings. Each utility or each district of a multi-district was allocated a time for filing once every three years. For multi-district filings, the time line for completing the proceeding increases with the number of districts filed simultaneously. The Commission also directed that the filing schedule be updated annually "to assure that each utility has a fair opportunity to file a general rate case . . . and to assure that the Commission's workload is balanced over time." Id. at 188. The schedule adopted provided for Cal Water to file rate cases for its districts in three equal increments over a three-year span. The Rate Case Plan also allowed for the utility to request waiver of the time schedules, and for the ALJ to revise the schedule for cause.
In contrast to the Rate Case Plan schedule, this consolidated proceeding includes 15 of Cal Water's 24 districts. This unprecedented number of districts filed simultaneously is not consistent with the Rate Case Plan and Cal Water did not seek a waiver of the schedule. The challenges presented by the proportions of this proceeding have been exacerbated by the skeletal direct case filed by Cal Water. As we discuss in detail below, the deficiencies of Cal Water's direct case required significant rebuttal testimony, presenting new and substantial factual evidence. Further delay in the proceeding resulted from the comparison exhibit being filed two months later than scheduled and the need for the ALJ to request supplemental information from the parties on two occasions. For these reasons, we find that good cause exists to modify the Rate Case Plan schedule to accommodate the extraordinary facts of this case.
On September 30, 2002, the Governor signed into law Assembly Bill 2838, to be codified as § 455.2, which requires that the Commission review and revise the Rate Case Plan to provide for mandatory general rate case filings on a three-year cycle. The Commission's review of the Rate Case Plan will establish the future filing schedule for water utilities and districts, including the 15 Cal Water districts considered in this proceeding. Consistent with the current Rate Case Plan, this proceeding sets rates for two test years and two attrition years. As some of the districts may be scheduled in the revised Rate Case Plan for another rate case filing prior to the final attrition year, we will make the 2005 attrition year increase contingent upon the revised Rate Case Plan.
