Position of Ratepayer Representation Branch (RRB)

RRB argues that DHS has promulgated no new, legally enforceable regulation regarding turbidity since the Commission determined that the plant had excess capacity of approximately 500 gpm. According to RRB, only the regulations promulgated in California's Surface Water Treatment Rule, and not the goals recommended in the CAP, are legally enforceable.

RRB contends that SCWC made a very expensive mistake in constructing the plant with capacity far in excess of that required in 1992, or currently. RRB points out that neither the number of customers nor the water requirements have increased since 1992 when the Commission determined that the plant had excess capacity. Further, RRB notes that the average of the maximum day demands has not exceeded 677. Accordingly, RRB believes that a further disallowance of 30% would be appropriate since the average of the maximum day demands is a full 30% lower than the 1050 gpm capacity authorized by the Commission in D.89-11-017.

RRB's witness testified that: (1) only the regulations of the DHS set forth in the Surface Water Treatment Rule are legally enforceable and must be followed by SCWC; (2) the goals set forth in the CAP are voluntary and should not be followed by SCWC "unless reasonably and economically achievable"; (3) the risk of a serious outbreak of Cryptosporidium at the Sonoma Treatment Plant is very low; (4) rates charged customers in the Clearlake District are already very high and the revenue requirement increase associated with SCWC's request would make rates highly unaffordable; and (5) inclusion of the $1.6 million of disallowed plant in rate base was not justified.

Further, RRB's witness testified that Clearlake customers could not reasonably afford to pay the additional $11 per month bill increase resulting from SCWC's request. The witness pointed out that the Clearlake District, located in Lake County, is one of the lowest income areas in California.

At hearing, RRB elicited support for some of its positions from SCWC witnesses. Roland S. Tanner, SCWC manager of Regulatory Affairs, agreed that Clearlake is a low-income community. In his prepared testimony, he wrote the following:

"SCWC believes rates in the Clearlake District are very high at present . . .. Therefore, it would be difficult to withstand an increase in rates to recover the revenue requirement attributable to the remaining $1.6 million in cost of the Sonoma Treatment Plant, and would present very serious affordability concerns." (SCWC/Tanner, Ex. 8, pp. 2-3)

In response to cross examination by RRB, Tanner acknowledged that Clearlake customers pay the highest rates and have the lowest consumption in Region I, which is comprised of seven SCWC districts that are not interconnected and span a distance of 400 miles. (June 21, 2000 - Transcript (TR.) Vol. 4, pp.289-90, Tanner/SCWC.) Notwithstanding the acknowledged financial hardship that customers would experience, Tanner also testified that SCWC was requesting rate recovery on the undepreciated balance of $1.6 million construction cost for a plant that he admitted had been "fully operational" since it was placed in service in 1992.

RRB questioned SCWC witness William Gedney about the utility's consideration of alternative methods to achieve the CAP goal. Gedney is the water quality environmental manager responsible for the implementation of SCWC's water quality and environmental policies. He stated that the utility did not consider alternative methods of treating the sedimentation basin.

"Q Now, at the bottom of page 2 of your rebuttal testimony, Mr. Gedney, you state that operation of the sedimentation basin at over 750 gallons per minute would adversely affect the entire treatment process of the plant. Do you see that reference?

"A Yes

"Q Now , in making that statement did you take into account the possibility of alternative methods of treatment at the sedimentation basin?

"A No.

"Q Did you take into account what would be - or did you seek to determine what would be the least-expensive means for your customers for operation of the sedimentation basin?

"A No." (June 20, 2000 TR. Vol.3, pp.225-226, Gedney/SCWC)

"Q Did the company consider any other alternative means of design, construction, or operation of the sedimentation basin to reduce the level of turbidity as it leaves the sedimentation basin?

"A Not in terms of operation, no.

"Q What about design or construction?

"A I wasn't there for the design, I can't say.

"Q Now when you say that you weren't there when they designed the facility, you mean ten years or so ago?

"A Right." (June 19, 2000 TR. Vol. 3, pp.194-195, Gedney/SCWC..)

Gedney also responded to RRB's hypothetical inquiries regarding alternatives if the plant were fully utilized.

"Q If the use of tube settlers would prove less expensive or less costly than the alternative proposed by the company in its application, should not that be adopted by the Commission consistent with the company's goal to keep level of turbidity in the plant's effluent?

"A Well, you're speaking hypothetically. If you take the case where you have fully utilized your treatment plant, for example, and then you want to increase sedimentation rates through a particular unit process, with that assumption that everything has been utilized in the treatment plant, tube settlers might be one mechanism that you would investigate to increase sedimentation rates."

"A If you have a case where a treatment plant is maxed out, so to speak, and then with the Cryptosporidium Action Plan or some issue coming up, you want to investigate another means of treatment, tube settlers is one way to go. But I'm not particularly convinced that tube settlers would be the most economical way to increase sedimentation rates.

"Q Did you undertake to determine whether it would be or not, in fact, at this particular plant?

"A No." (June 10, 2000 TR. Vol. 2, pp. 196-197, Gedney/SCWC.)