9. Treatment of Facilities Fees

D.07-04-046 provided for the collection of facilities fees for new development from developers, builders, and new customers. The facilities fees would be recorded as Contributions in Aid of Construction (CIAC). The decision also required SGV's annual revenue requirement advice letter filings to reflect the revenue requirement reductions caused by an increase in CIAC resulting from collected facilities fees.

9.1. Positions of Parties

COF recommends that SGV provide the most recent facilities fees balance for inclusion as a ratebase offset. If SGV does not do so, COF recommends that Commission reduce ratebase by $2,523,000 as estimated additional fees collected from October 1, 2008 through June 30, 2009. COF recommends that SGV be required to include additional facilities fees collected as an offset to future annual advice letters as provided for in the settlement. COF also alleges SGV does not include interest on facilities fees in its accounting as required by D.07-04-046, and recommends that it be required to do so.

FUSD agrees with the position taken by COF.

SGV states that due to the uncertainty in forecasting facilities fees, no additional facilities fees should be estimated in this GRC and the advice letter process established in Ordering Paragraph 3 of D.07-04-046 should be continued.

9.2. Discussion

D.07-04-046 requires that facilities fees collected must be credited to CIAC at the time the fees are spent for additional plant and earn interest.⁵ Thus, facilities fees will offset ratebase additions. However, it is necessary to have a reasonable estimate of facilities fees accounted for as CIAC for the test year.

The facilities fees collected for the 11-month period November 2007 through September 2008 were $3,083,900. That amounts to $280,355 per month. The number of customers adopted herein is based on the number of customers as of December 31, 2007, with the assumption of no customer growth. While the record does not indicate why facilities fees have continued to be collected when customer growth has virtually stopped, some construction must have continued in order for such fees to still be collected. It is not reasonable to assume the amount of facilities fees collected through June 30, 2009 will continue at the same rate as for the 11 months ended September 2008. As the economic downturn has continued, the amount of facilities fees collected can be expected to decline substantially. Therefore, it is reasonable to assume that an additional $1 million in facilities fees will be collected for the nine-month period October 1, 2008 through June 30, 2009. The facilities fees collected through September 2008 and estimated through June 30, 2009 shall be included in ratebase as CIAC. Additionally, the amount of facilities fees to be collected continues to be difficult to forecast. Therefore, the inclusion of facilities fees in the annual revenue requirement advice letter filings, as provided for in D.07-04-046, will be continued through this GRC cycle. To the extent actual facilities fees vary from the above estimate, they will be addressed through the advice letter filings. The settlement, without these alternative terms, is not in the public interest.

⁵ D.07-04-046, Ordering Paragraph 69.