22. Reasonableness Review-Job No. 4895-Plant F51 Acquisition of Land Parcel No. 221

SGV purchased a parcel of land for construction of three wells, a reservoir and a booster station. The land was purchased in 2004. SGV originally estimated the cost at $350,000. The recorded cost is $382,694.

22.1. Positions of Parties

DRA recommends that, because the project associated with the parcel has been deferred for this GRC cycle, the cost of the parcel should be excluded from ratebase. DRA points out that the project for this parcel, Plant F51, was proposed in the last two GRCs, but has been delayed until SGV decides to pursue the California Environmental Quality Act (CEQA) process.

COF represents that the land was purchased for the addition of water production, storage and pumping facilities at Plant F51. COF states that the land has been vacant since 2004 and has not been used, and that SGV has not included such improvements in this application. Therefore, COF recommends that the parcel be excluded from ratebase.

FUSD states the land will not be used during the GRC forecast period and should be excluded from ratebase. FUSD proposes that the land be put in a memorandum account that would include costs associated with holding of the property for future use. That way, if the land is ever used, SGV would be able to request recognition of those costs.

SGV states that in discussing the facilities planned to be built at Plant F51, the City of Fontana determined that a full environmental review pursuant to CEQA would be required. SGV determined that such a review would delay the project and devoted its resources to other projects. SGV represents the project remains part of its plans to improve its water system and it plans to include the project in its next GRC.

SGV states that the site is located in an area where perchlorate has not been detected and there are few citrus groves that could cause nitrate contamination.

22.2. Discussion

The property will not be used in this GRC cycle. The project for this parcel, Plant F51, was proposed in the last two GRCs. SGV delayed this project because of the CEQA process. SGV stated it will pursue the CEQA process when there is staff time available, and intends to include the project in the next GRC. Given this project's history, it is not at all certain that it will be authorized or built in the next GRC cycle.

While SGV asserts it has a definite plan to use the property, the date is uncertain. Therefore, treatment as PHFU is inappropriate. However, in order to provide equitable treatment of SGV and its customers regarding this land that may have a future use, SGV is authorized to establish a memorandum account that will list the costs incurred or associated with holding the property for future use.¹² If the property is ultimately used as planned, SGV may request recovery of such costs.

¹² See D.87-03-078, in Re California Water Service (1987) 24 CPUC2d 68, 87.