April 23, 2002

1. Beginning with the revenue requirement adopted by the Commission in this proceeding, and 2002 tariff rates calculated using the method proposed by California Water Service Company (Cal Water), subtract 20% discounts to: (a) the tariff volumetric rate less the wholesale rate for reclaimed water paid by Cal Water, and (b) the tariff service charge.

2. The resulting 2002 volumetric rate shall not be lower than the current volumetric rate of $1.4512 per hundred cubic feet (ccf), and the resulting service charge shall not be lower than the current service charge of $251.00 per month.

3. When Cal Water receives a 2003 step increase, and 2004 and/or 2005 attrition increases, the reclaimed water rates shall be recalculated. The floor volumetric rate and service charge shall be the reclaimed water rates in effect prior to the step or attrition increases.

4. The volumetric rate, including the 20% discount, shall be recalculated if the Commission approves any change to the wholesale rate for reclaimed water paid by Cal Water.

5. Northern Ranch Country Club withdraws its recommendation that Cal Water be required to submit a comprehensive cost allocation study in its next rate proceeding.

6. The "Direct Testimony of John H. Mook on Behalf of North Ranch Country Club," including accompanying exhibits, and any related rebuttal testimony shall be received into evidence subject to future cross-examination if for any reason cross-examination becomes necessary.

7. This joint recommendation is supported by all parties to this proceeding: Cal Water, the Office of Ratepayer Advocates, North Ranch Country Club and Aglet Consumer Alliance.

Example Reclaimed Water Calculations

1.  The reclaimed water discount will be calculated as follows, where:

(a)  Wholesale reclaimed water rate paid by Cal Water to Calleguas =

$402 per acre-foot / 435.6 ccf per acre-foot = $0.9229 per ccf;

(b)  Present volumetric rate for reclaimed water = $1.4512 per ccf;

(c)  Proposed volumetric rate for reclaimed water = $1.5953 per ccf;

(d)  Present monthly service charge = $251.00; and

(e)  Proposed monthly service charge = $349.35.

2.  If the Commission adopts Cal Water's requested revenue requirement for 2002, the joint recommendation for the volumetric rate would be:

$1.5953 - 20% x ($1.5953 - $0.9229) = $1.4608 per ccf,

which is higher than the floor rate of $1.4512 per ccf.

The joint recommendation for the service charge for 2002 would be:

$349.35 x (1 - 20%) = $279.48 per month,

which is also higher that the floor rate of $251.00 per month.

3.  Then if Cal Water is authorized a 3% step increase for 2003, the volumetric rate before the discount would be approximately:

$1.5953 + 3% x ($1.5953 - $0.9229) = $1.6155 per ccf.

The volumetric rate after the discount would be:

$1.6155 - 20% x ($1.6155 - $0.9229) = $1.4770 per ccf,

which is higher than the new floor rate of $1.4608 per ccf.

Expressed differently, the volumetric rate after the discount would be:

$1.4608 + (1- 20%) x ($1.6155 - $1.5953) = $1.4770 per ccf.

The result is the same.

The service charge before the discount would be approximately:

103% x $349.35 = $359.83 per month.

The service charge after the discount would be:

$359.83 x (1 - 20%) = $287.86 per month,

which is also higher than the new floor rate of $279.48 per month.

Calculations for subsequent attrition years would be similar.

4.  If the Commission were to adopt 60% of Cal Water's requested relief for 2002, the volumetric rate before the discount would be approximately:

$1.4512 + 60% x ($1.5953 - $1.4512) = $1.5377 per ccf.

The volumetric rate after the discount would be:

$1.5377 - 20% x ($1.5377 - $0.9229) = $1.4147 per ccf,

which is lower than the floor rate of $1.4512 per ccf. Therefore the floor rate would prevail.

The service charge before the discount would be approximately:

$251.00 + 60% x ($349.35 - $251.00) = $310.01 per month.

The service charge after the discount would be:

$310.01 x (1 - 20%) = $248.01 per month,

which is also lower than the floor rate of $251.00 per month. Therefore, the floor rate would prevail.

* * *

Dollars at Stake

Potential 2002 discount for North Ranch Country Club =

203,225 ccf (2001 usage) x ($1.5953 - $1.4608 ) + 0.2 x $349.35 x 12 = $27,334 + $838 = $28,172

Compare to 2001 total annual bill = $390,831 or undiscounted revenue at present rates = 203,225 x $1.4512 + $251 x 12 = $297,932. The value of the discount will be less than 10% of annual bills for North Ranch Country Club.

(End of Attachment C)

Attachment D

§ 789.1. Legislative findings and declarations

The Legislature finds and declares all of the following:

   (a) Water corporations currently are faced with, and will continue to be faced with, increasing demands for new infrastructure, plant, and facilities to comply with increasingly strict state and federal safe drinking water laws and regulations.

   (b) The state's limited water supply will require investment by water corporations in infrastructure, plant, and facilities to develop new sources of supply, make existing sources of supply more reliable, and encourage and implement water conservation measures including water reclamation and reuse.

   (c) Water corporations also are faced with the need to replace or upgrade water infrastructure, plant, and facilities and to design and construct all of those replacements and improvements to meet the governing fire flow standards for public fire protection purposes.

    (d) Water corporations may, from time to time, own real property that once was, but is no longer, necessary or useful in the provision of water utility service and that now may be sold. It is the policy of the state that water corporations be encouraged to dispose of real property that once was, but is no longer, necessary or useful in the provision of water utility service and to invest the net proceeds therefrom in utility infrastructure, plant, facilities, and properties that are necessary or useful in the provision of water service to the public. 

   (e) It is the policy of the state that any net proceeds from the sale by a water corporation of real property that was at any time, but is no longer, necessary or useful in the provision of public utility service, shall be invested by a water corporation in infrastructure, plant, facilities, and properties that are necessary or useful in the performance of its duties to the public and that all of that investment in infrastructure, plant, facilities, and properties shall be included among the other utility property of the water corporation that is used and useful in providing water service and upon which the commission authorizes the water corporation the opportunity to earn a reasonable return.

§ 790.  Investment in water system infrastructure

   (a) Whenever a water corporation sells any real property that was at any time, but is no longer, necessary or useful in the performance of the water corporation's duties to the public, the water corporation shall invest the net proceeds, if any, including interest at the rate that the commission prescribes for memorandum accounts, from the sale in water system infrastructure, plant, facilities, and properties that are necessary or useful in the performance of its duties to the public. For purposes of tracking the net proceeds and their investment, the water corporation shall maintain records necessary to document the investment of the net proceeds pursuant to this article. The amount of the net proceeds shall be a water corporation's primary source of capital for investment in utility infrastructure, plant, facilities, and properties that are necessary or useful in the performance of the water corporation's duties in providing water utility service to the public. 

   (b) All water utility infrastructure, plant, facilities, and properties constructed or acquired by, and used and useful to, a water corporation by investment pursuant to subdivision (a) shall be included among the water corporation's other utility property upon which the commission authorizes the water corporation the opportunity to earn a reasonable return.

   (c) This article shall apply to the investment of the net proceeds referred to in subdivision (a) for a period of 8 years from the end of the calendar year in which the water corporation receives the net proceeds. The balance of any net proceeds and interest thereon that is not invested after the eight-year period shall be allocated solely to ratepayers.

   (d) Upon application by a water corporation with 10,000 or fewer service connections, the commission may, after a hearing, by rule or order, exempt the water corporation from the requirements of this article.

   (e) The commission retains continuing authority to determine the used, useful, or necessary status of any and all infrastructure improvements and investments.

(End of Attachment D)

Attachments E thru X

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