Comments on Alternate Draft Decision
The alternate draft decision of Commissioner Bilas in this matter was mailed to the parties in accordance with Public Utilities Code Section 311(g) and Rule 77.6 of the Rule of Practice and Procedure. Comments were filed on ____________ and reply comments were filed on ________________.
1. In D. 89-11-017, the Commission authorized SCWC to construct a treatment plant at a cost of $1.275 million with a capacity of 1050 gpm.
2. In 1992, SCWC completed the Sonoma Treatment Plant at a cost of $3.1 million with a capacity of 1500 gpm.
3. In SCWC's 1992 general rate case application, the Commission concluded that the plant had excess capacity of approximately 500 gpm or one-third of its total capacity, (D.93-06-035, 49 CPUC2d 511, 519).
4. In D.93-06-035, the Commission decided that it was just and reasonable to include plant rate base of $1.5 million but that rate recovery on the remaining $1.6 million of plant cost should not be authorized until customer growth or demand require additional plant capacity.
5. But for, SCWC's decision to overbuild the Sonoma Treatment Plant, there would be no significant excess capacity at the plant.
6. When the plant was constructed in 1992, the Surface Water Treatment Rule required that the finished water not exceed a 0.5 Nephelometric Turbidity Unit (NTU) turbidity standard.
7. In April 1995, DHS issued its Cryptosporidium Action Plan (CAP), a multi-faceted program for optimization of treatment processes employed at surface water facilities to minimize the risk of waterborne illness outbreak.
8. The CAP provides a surface water treatment plant effluent turbidity goal of 0.1 NTU. DHS reiterated its expectation that public water systems would implement treatment optimization goals in a letter dated July 9, 1997 and in its February 1997 Treatment Plant Optimization Criteria and Guidelines.
9. The CAP provides and the DHS representative testified that the treatment plant consistently should be operated at the lowest rate possible to minimize any chance that pathogens could break through into the treated water.
10. In 1996, the California Legislature enacted Section 116360 of the Health and Safety Code, which requires DHS to implement its Cryptosporidium Action Plan.
11. Following a 1997 inspection, DHS recommended that the sedimentation basin at the Sonoma Treatment Plant be limited to a flow rate of 720 gpm (0.5 gpm/square foot surface overflow rate) due to the depth of only 8 feet. This restriction is well within the plant capacity of 1050 gpm anticipated in the original plant design authorized in D.89-11-017.
12. The number of customers in Clearlake District has decreased and the water consumption reduced since the plant was placed in service in 1992. Thus, there has been no increase in plant capacity necessitated by increased customer growth or demand.
13. Since 1995, year round customer demand for water, even including the day each year of highest demand, has been well below the DHS recommended flow rate restriction of 720 gpm for the plant's sedimentation basin.
14. The Clearlake District customers pay the highest water rates and have the lowest water consumption of the seven districts in SCWC's Region 1.
15. Because the average of recorded maximum day demands between 1992 and 1999 is 677 gpm, 30 percent below the 1050 gpm anticipated by the Commission when it authorized construction of the plant in D.89-11-017, the Ratepayer Representative Branch recommends that the Commission reduce by 30 percent the $1.5 million authorized for plant cost in D.93-06-035.
16. The Sonoma Treatment Plant satisfies the CAP optimization goals and customers enjoy improved water quality.
17. Expenses associated with SCWC's implementation of the CAP at the Sonoma Treatment Plant were projected in the Clearlake District's last general rate case and already are in rates pursuant to D.00-12-063.
18. SCWC has not shown that the Sonoma Treatment Plant is fully utilized or that excess capacity found in D.93-06-035 no longer exists.
19. SCWC has not shown that its CAP program at the Sonoma Treatment Plant is the only means of satisfying the plant optimization goals of CAP or that there are no alternative CAP methodologies less expensive than rate recovery on capital investment of $1.6 million.
1. SCWC should not be allowed to include in rate base investments that are unnecessary for safe and reliable service.
2. SCWC should not be allowed to reap the benefit of its mistake in over sizing the plant.
3. SCWC has not satisfied its burden of showing by clear and convincing evidence that its request for rate recovery on $1.6 million, the amount of plant construction cost disallowed in D.93-06-035, would be a just and reasonable expense to be borne by ratepayers.
4. SCWC's request for rate relief in this application should be denied.
5. The requirement in D.93-06-035 that additional rate recovery on $1.6 million of the construction costs of the Sonoma Treatment Plant be conditioned on a showing that increased customer growth or demand requires additional plant capacity should not be modified.
6. The Ratepayer Representation Branch's request for a 30 percent reduction in rate recovery on the $1.5 million plant cost authorized in D.93-06-035 should be denied.
IT IS ORDERED that:
1. Southern California Water Company's request to include in rate base an additional undepreciated amount of $1.6 million of plant construction costs of the Sonoma Treatment Plant in Clearlake District is denied.
2. The Ratepayer Representation Branch's request that the amount currently included in rate base for the construction of the Sonoma Treatment Plant be reduced by thirty percent is denied.
3. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of the original attached Commissioner Bilas' Alternate Draft Order, on all parties of record in this proceeding or their attorneys of record.
Dated June 28, 2001, at San Francisco, California.
Sally Cuaresma |
NOTICE
Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
The Commission's policy is to schedule hearings (meetings, workshops, etc.) in locations that are accessible to people with disabilities. To verify that a particular location is accessible, call: Calendar Clerk (415) 703-1203.
If specialized accommodations for the disabled are needed, e.g., sign language interpreters, those making the arrangements must call the Public Advisor at (415) 703-2074,
TTY 1-866-836-7825 or (415) 703-5282 at least three working days in advance of the event.
