Conclusions of Law
1. The adopted summaries of earnings presented in Appendix A, and the quantities and calculations included as Appendix D that underlie them, are reasonable for ratemaking purposes and should be adopted.
2. A change in the FMCT tariff is not warranted on this record.
3. Suburban should be authorized to establish a memorandum account to track costs associated with federal and state legislation requiring security measures to prevent acts of terrorism.
4. Suburban should not be required to establish a balancing account or memorandum account for CR reimbursements, but it should be required to prepare a pro forma exhibit showing contamination costs and reimbursements if so requested by ORA.
5. Suburban's request for three test years in this General Rate Case should be denied.
6. A minimum fine of $500 for each of two infractions should be assessed with respect to the acquisition of Maple Water Company.
7. The revised rates and step increases set forth in Appendix B are justified.
8. Suburban should be authorized to implement the rate changes set forth in this order.
9. This decision should be made effective immediately to allow Suburban opportunity to earn the return found reasonable for it in test year 2003.
IT IS ORDERED that:
1. Suburban Water Systems (Suburban) is authorized to file in accordance with General Order 96, and make effective on not less than five days' notice, the revised tariff schedules for 2003 included as Appendix B to this order. The revised tariff schedules shall apply to service rendered on and after their effective date.
2. On or after November 5, 2003 and November 5, 2004, Suburban is authorized to file advice letters in conformance with General Order 96, with appropriate supporting workpapers, requesting the step rates authorized in Appendix C of this decision for 2004 and 2005, respectively. If the rate of return on rate base for Suburban, taking into account the rates then in effect and normal ratemaking adjustments for the 12 months ending September 30, 2003 and September 30, 2004, respectively, exceeds the lower of (a) the rate of return found reasonable by the Commission for the corresponding period in the most recent decision, or (b) the rate of return found reasonable in this order, then Suburban shall file for a lesser increase. The requested rates shall be reviewed by the Commission's Water Division and shall go into effect on the following January 1. If, after Water Division's determination that they do not conform to this order, the Water Division shall inform the Commission and prepare a Resolution that adjusts the rates. The revised tariff schedules shall be made effective as of January 1, 2004 and January 1, 2005, respectively, and shall apply to service rendered on and after their effective date.
3. Suburban is authorized to file advice letters seeking Commission authorization for rate offsets for the following capital projects when each has been completed and placed in service, with costs not to exceed those indicated:
· San Jose Hills Service Area. Replacement of existing 2-million gallon concrete tank at Plant 121 at a cost of $1,352,000.
· Whittier/La Mirada Service Area. Replacement of the existing pump station at Plant 235 at a cost of $1,045,000.
· Plant 410. Construction of an iron and manganese removal treatment facility at a cost of $1,400,000.
· Plant 235. Replacement of an existing steel tank at a cost of $1,014,000.
The advice letters shall be effective on filing. If the Water Division finds that the proposed rate offsets do not conform with this order, the Water Division shall prepare a Resolution that adjusts the rates as of the effective date.
4. Suburban is authorized to establish a memorandum account to track costs associated with any federal or state legislation requiring security measures to prevent acts of terrorism.
5. Suburban is authorized to include in rates the requested value of acquired Maple Water Company (Maple) assets.
6. Suburban shall within 60 days pay a fine of $1,000 for two filing infractions involved in its acquisition of Maple; the fine shall be payable to the state's General Fund.
7. In the future, upon request of the Office of Ratepayer Advocates, Suburban shall prepare a pro forma exhibit showing all reimbursements by Cooperating Respondents and the contamination costs for which reimbursement has been made.
8. The summaries of earnings presented in Appendix A, and the quantities and calculations included as Appendix D which underlie them, are adopted.
9. Suburban's requests in Application (A.) 02-05-033 are granted as set forth above, and in all other respects are denied.
10. A.02-05-033 is closed.
This order is effective today.
Dated ____________________, at San Francisco, California.
