4.00 District Plant & Rate Base

General

4.01 ORA and CWS agree to use a ten-year average adjusted for inflation for estimating non-specific capital expenditures. This consistent method for all districts was used in ORA's reports for Cal Water's southern districts.

4.02 Cal Water provided additional information clarifying that the 20% factor for employee time to convert its district water system paper maps to digital maps was not Cal Water's standard overhead factor. Based on Cal Water's additional information ORA agrees that the 20% factor should replace its use of Cal Water's standard overhead factor for this project.

4.03 ORA and Cal Water have revised the lag days for computing the impact of federal and state income taxes on working cash allowance based on actual taxes paid and agree that 93 lag days fairly represents the timing and amount of taxes paid. Accordingly, Cal Water and ORA recommend that 93 lag days be used for the Commission adopted tax expense in determining the appropriate level of working cash allowance.

Advice Letters

4.04 Bear Gulch

ORA and Cal Water agree that the advice letter for the cryptosporidium deactivation project recommended in ORA's report may be filed as long as the equipment is in service prior to January 1, 2005 and capped at $648,000 for capital costs.

4.05 King City

ORA and Cal Water agree that Cal Water should be allowed to file an advice letter for a 2003 well project as long as the well is in service prior to January 1, 2005 and capped at $500,000 for capital costs and an additional $100,000 for permitting.

4.06 Marysville

ORA and Cal Water agree that Cal Water should be allowed to file advice letters for the 2003 greensand purification project capped at $734,000 and the 2003 MTBE purification project capped at $864,000 if they are in service prior to January 1, 2005. ORA also agrees that should Cal Water demonstrate in its advice letter that one or more alternative capital improvement projects is equally cost effective that Cal Water should be authorized to replace the greensand and/or MTBE projects with one or more projects that are equally cost effective.

4.07 Mid-Peninsula

ORA and Cal Water agree that Cal Water should be allowed to file an advice letter covering the capital cost of a new operation center capped at $1 million as long as the facilities are in service prior to January 1, 2005.

4.08 Salinas

ORA and Cal Water agree that the north Salinas reservoir project should be deferred until the next general rate case for the Salinas District. Accordingly, ORA and Cal Water agree that the Commission should not adopt ORA's recommended advice letter treatment for this project.

4.09 Visalia

After additional discussions concerning Cal Water's request for two new wells, ORA and Cal Water agree that both wells should be excluded from ORA's estimate of the capital budget and that Cal Water should be authorized to file an advice letter capped at $600,000 for each well if in service prior to January 1, 2005.

4.10 Westlake

Cal Water and ORA agree that Cal Water should be allowed to file an advice letter capped at $250,000 to recover the capital costs of the Notter reservoir turnover project as long as it is in service prior to January 1, 2005.