ALJ/BMD/avs DRAFT Item 10

Agenda ID #765

7/17/2002

Decision ___________________

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Southern California Water Company (U 133 E) for Authority to Increase Rates for Electric Service in the Bear Valley Electric Customer Service Area.

Application 01-08-020 (Filed August 17, 2001)

DECISION ADOPTING SETTLEMENT AGREEMENT

TABLE OF CONTENTS

Title Page

Summary 22

Background 33

Description of the Settlement Agreement 1111

Criteria for Approving All Party Settlements 1313

Criteria for Approving Settlements 1414

The Settlement is Consistent with Law and Prior Commission Decisions 1414

The Settlement Agreement is Reasonable in Light of the Record as a Whole 1515

The Settlement Agreement is in the Public Interest 1616

Comments on Draft Decision 1717

Findings of Fact 1818

Conclusions of Law 1919

ATTACHMENT 1 Settlement Agreement

ATTACHMENT 2 Proposed Tariffs

DECISION ADOPTING SETTLEMENT AGREEMENT

Summary

We grant the Joint Motion for Adoption of the Proposed Settlement Agreement (Joint Motion)¹ filed on February 8, 2002 relating to Southern California Water Company's (SCWC) Application (A.) 01-08-020 seeking authorization to increase electric rates in its Bear Valley Electric Customer Service Area (BVECSA). In so doing, we authorize SCWC to increase its total annual revenue collected through its Purchased Power Adjustment Clause (PPAC) by $6,003,188. This amount represents a 38% increase over the current total annual BVECSA revenues of $15, 791,610. The adopted rates will increase PPAC annual revenues from $5,227,693 to $11,230,881.

The Joint Motion was filed on behalf of the settling parties: SCWC, the Office of Ratepayer Advocates (ORA) and Bear Mountain Inc., (Bear Mountain). In granting the Joint Motion, we find that the Settling Parties are fairly representative of all affected interests in this proceeding, and pursuant to Rule 51 of the Commission's Rules of Practice and Procedure, the Settlement Agreement is "reasonable in light of the whole record, consistent with law, and in the public interest" as required by Rule 51.1(e).²

The Settlement Agreement addresses the stipulation among the Settling Parties to use a weighted average annual cost of $77.00 per Megawatt-hour (MWh) in the calculation of the Energy Charge component of PPAC. Based on adopted annual purchases of 117,322 MWh, total energy costs are $9,033,794 per year. Settling Parties also stipulate to annual scheduling coordination costs of $77,063, and an annual Power System Delivery Charge cost of $2,120,024, resulting in total PPAC costs of $11,230,881 per year. Table A in the Settlement Agreement (p. 8) compares the stipulated revenues to revenues requested by SCWC in its application and revenues at present rates. Table B in the Settlement Agreement (p. 8) allocates the revenue requirement to SCWC customer classes.

In adopting the Joint Motion, we conclude that the Settlement Agreement resolves all of the disputed issues in this proceeding. Furthermore, the Settlement Agreement provides significant benefits to SCWC customers including a cap on purchased power costs, a reduction in the PPAC Balancing Account undercollection, the elimination of a $600,000 attrition increase for SCWC's water utility customers, a reduction of almost $630,000 in annual PPAC costs due to a reduction in the Power System Delivery Charge, fixing the rate of the PPAC surcharge, and establishing a rate design that does not increase energy rates for permanent residential customers using 130% or less of baseline allowance.