8. District Specific Issues
The remaining part of this decision addresses issues specific to each CSA.
8.1. Rates for the Seven Districts
The rate increases approved for each CSA are attached hereto as Attachment C. A comparison of present rates and adopted rates for 2008 is attached hereto as Attachment E.
8.2. Arden Cordova CSA
The Arden Cordova CSA is located in Rancho Cordova, California. In 2008, Arden Cordova is forecasted to serve approximately 16,515 customers. (Section 3.01, Stipulation, attached hereto as Attachment A.) The water supply for the Arden Cordova system is generated by wells owned by Golden State and surface water treated in a direct filtration treatment plant. The Commission last engaged in a comprehensive review of the rates for the Arden Cordova CSA in A.00-03-064 (filed March 28, 2000). In D.00-12-063, we issued final rates for years 2001 and 2002. Regarding 2004 rates, Golden State requested in A.03-10-057 inflationary increases over the expense levels approved in D.00-12-063. Golden State filed a transitional rate case in 2004, A.04-08-042, requesting expense and rate base adjustments to levels authorized in D.04-08-052. Then, D.05-05-025 approved rates for 2006 and 2007. However, the Arden Cordova CSA has not been comprehensively reviewed since 2000.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Arden Cordova |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Allocated General Office Expenses |
$1,611,400 |
$2,239,600 |
$628,150 |
Labor Expenses |
$335,060 |
$799,400 |
$464,340 |
Supply Expenses |
$762,600 |
$1,141,500 |
$378,900 |
Amortization and Depreciation |
$1,416,400 |
$1,866,900 |
$450,500 |
Other Operation Expenses/Water Conservation |
$237,500 |
$461,000 |
$223,500 |
As noted in the Stipulation, the parties compromised on a number of matters related to Arden Cordova, including the capital budget. As a result, no disputed capital budget matters remain for the Arden Cordova CSA. For all the reasons indicated above, we approve of a rate increase for the Arden Cordova CSA.
8.3. Bay Point CSA
The Bay Point CSA is located within the unincorporated community of Bay Point, California, which lies along the southern shore of Suisun Bay, east of Concord. In 2008, Bay Point is forecasted to serve approximately 4,996 customers. (Section 3.01, Stipulation, attached hereto as Attachment A.) Golden State purchases 93% of the raw water supply for Bay Point from Contra Costa Water District via the Contra Costa Canal. The raw water is treated at the Hill Street Treatment Plant and distributed through the distribution system. Golden State also purchases water from Contra Costa at a new interconnection and participates in a buy-in from Contra Costa's Bollman Treatment Plant. According to Golden State, water quality and distribution are high priorities in the Bay Point CSA. Accordingly, these priorities are reflected in the proposed capital expenditures.
The Commission last engaged in a comprehensive review of the rates for the Bay Point CSA in A.00-03-064 (filed March 28, 2000). In D.00-12-063, we issued final rates for years 2001 and 2002. Regarding 2004 rates, Golden State requested in A.03-10-057 inflationary increases over the expense levels approved in D.00-12-063. Golden State filed a transitional rate case in 2004, A.04-08-042, requesting expense and rate base adjustments to levels authorized in D.04-08-052. Then, D.05-05-025 approved rates for 2006 and 2007. However, the Bay Point CSA has not been comprehensively reviewed since 2000.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Bay Point |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Cost of Capital |
7.57% |
9.41% |
$396,870 |
Supply Expenses |
$1,801,200 |
$1,929,900 |
$128,700 |
Labor Expenses |
$304,700 |
$421,500 |
$116,810 |
Depreciation Expenses |
$634,100 |
$750,100 |
$116,000 |
Allocated General Office Expenses |
$368,500 |
$457,200 |
$106,700 |
As noted in the Stipulation, the parties compromised on a number of matters related to the Bay Point CSA, including the capital budget. As a result, no disputed capital budget matters remain for the Bay Point CSA. For all the reasons indicated above, we approve of a rate increase with the expectation that service quality will improve in the near term.
In this proceeding, we raised the issue of the whether Golden State should fluoridate water in Bay Point. We raised this issue in an ALJ ruling dated August 24, 2007. The ALJ ruling sought to include additional evidence in the record, specifically a letter addressed to the ALJ from Dr. Brunner, Contra Costa Health Service, the Director of Public Health (Ex. A) and a position statement by the American Dental Association (Ex. B). In response to this ruling, Golden State voiced its objection to including certain portions of Exhibit A in evidence. In a subsequent ALJ ruling, we agreed with Golden State that certain portions of Exhibit A should not be included in evidence because those portions are irrelevant to the issue of fluoridation.
As a general policy, Golden State indicated it had no objection to being directed to fluoridate the water it delivers to customers provided that the Commission determines fluoridation is in the best interest of customers and that Golden State is authorized to fully recover the related capital costs and operating expenses.
Based on Exhibit A, the letter from Dr. Brunner requesting that Golden State fluoridate the Bay Point water and the position statement by the American Dental Association found at Exhibit B, we find that fluoridation in Bay Point is in the public interest. Accordingly, we direct Golden State to file an advice letter within 180 days proposing to fluoridate the water in Bay Point. The advice letter must describe the costs associated with fluoridation and propose a cost recovery mechanism. This advice letter will be designated as a Tier 3 advice letter and must be served on the service list of this proceeding. After review of the advice letter, if we find the costs associated with fluoridation to be reasonable, we will issue a resolution to direct Golden State to proceed.
8.4. Clearlake CSA
The Clearlake CSA is located in Clear Lake, California, adjacent to the eastern edge of Clear Lake. The Clearlake CSA is forecasted to serve 2,179 customers in 2008. (Section 3.01, Stipulation, attached hereto as Attachment A.) Golden State obtains its raw water supply from Clear Lake. The Sonoma Treatment Plant receives raw water from Clear Lake and treats it to provide the system's supply of potable water. Golden State states that water distribution-related projects are high priority in this CSA and this priority is reflected in its capital budget. The Commission last engaged in a comprehensive review of the rates for the Clearlake CSA in A.00-03-064 (filed March 28, 2000). In D.00-12-063, we issued final rates for years 2001 and 2002. Regarding 2004 rates, Golden State requested in A.03-10-057 inflationary increases over the expense levels approved in D.00-12-063. Golden State filed a transitional rate case in 2004, A.04-08-042, requesting expense and rate base adjustments to levels authorized in D.04-08-052. Then, D.05-05-025 approved rates for 2006 and 2007. However, the Clearlake CSA has not been comprehensively reviewed since 2000.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Clearlake |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Rate Base |
$4,118,200 |
$4,547,200 |
$67,100 |
Depreciation Expenses |
$239,900 |
$302,200 |
$62,300 |
Cost of Capital |
8.74% |
9.41% |
$54,500 |
Supply Expenses |
$76,200 |
$123,300 |
$47,100 |
General Office Allocation |
$121,000 |
$162,100 |
$41,100 |
As noted in the Stipulation, the parties compromised on a number of matters related to the Clearlake CSA, including the capital budget. As a result, no disputed capital budget matters remain. For all the reasons indicated above, we approve of a rate increase with the expectation that service quality will improve in the near term.
One issue in Clearlake not addressed by the Stipulation is Water Loss. In Clearlake, Golden State forecasted Water Loss to be 47.48% in 2008 and DRA estimated this figure to be 35.35%. These figures are significantly above the Water Loss experienced in the other CSAs and significantly above the 7% target we adopted in D.07-05-062. Accordingly, we expect Golden State to make progress on reducing its Water Loss and to seek any additional Commission approvals necessary to accomplish this goal. At a minimum, Golden State must file an advice letter within 120 days of the date of this decision proposing a solution to reduce Water Loss in the Clearlake CSA.
8.5. Los Osos CSA
The Los Osos CSA is comprised of the Los Osos and Edna Road Water systems. The Los Osos and Edna Road systems are both located in the County of San Luis Obispo. The Los Osos CSA is forecasted to supply water to approximately 3,314 customers in 2008. (Section 3.01, Stipulation, attached hereto as Attachment A.) Water supply to Los Osos is furnished by eight active company-owned wells and one standby well that pumps water from the Los Osos and Edna Valley Groundwater Basins. All current water supply needs are being met by existing groundwater production. Groundwater offers the benefit of being low in cost and flexible in operation. However, additional sources of water will be needed to supply the Los Osos CSA by 2020. In the near team, Golden State will be planning to diversify and increase its water supply, increase its storage capabilities, and upgrade its infrastructure. Consistent with the procedural history of the other CSAs described above, the Commission last addressed a GRC for the Ojai CSA in D.05-05-025 and has since approved of several rate changes via advice letters.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Los Osos |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Cost of Capital |
4.88% |
9.41% |
$699,700 |
Labor Expenses |
$186,300 |
$331,300 |
$145,000 |
Chemicals |
$19,100 |
$158,900 |
$139,800 |
Rate Base |
$7,474,200 |
$8,666,200 |
$103,700 |
Depreciation Expenses |
$367,300 |
$452,700 |
$85,400 |
For all the reasons indicated above, we approve of a rate increase with the expectation that service quality will improve in the near term. As noted in the Stipulation, the parties compromised on a number of matters related to the Los Osos CSA, including capital budget. However, certain items regarding capital budget remain in dispute. We address these disputed items below.
Golden State proposes to upgrade the electrical service to the Lewis Lane wells. Currently, two wells at Lewis Lane are operated by a single motor control center. This single motor control center cannot operate both wells simultaneously. The proposed upgrade is intended to provide Golden State with the ability to operate both wells simultaneously at variable speeds. According to Golden State, this will allow both wells to operate at a lower production rate per well, which will result in a shallower drawdown in each well. As a result of this shallower drawdown, Golden State notes that this upgrade will keep selenium concentrations below the Maximum Contaminant Level (MCL) from both wells and eliminate entrained gas. (Ex. GSW(ALL)-22; Golden State Opening Brief, p. 13.)
DRA objected to the funding of this capital project. Based on DRA's analysis, the additional pumping capacity is not needed under the factors set forth in Title 22, California Code of Regulations, § 64562. DRA presents a strong argument.
However, we remain concerned about Golden State's claim that the project "could keep selenium concentrations below MCL" and "aid in improving water quality to ensure customer satisfaction." DRA did not address these issues. Based on the evidence regarding MCL improvement, we approve of this project as proposed by Golden State. We anticipate that water quality and customer satisfaction will improve accordingly.
Golden State proposes certain main extensions that involve loop closures to improve water circulation, prevent stagnation, and the loss of chlorine residual in deadend pipes. The loop closures will also improve fire flow and address the seven fire hydrants located near these lines that do not currently meet minimum fire flow requirements.
DRA claimed that Golden State's request and the related costs are not supported by the facts. DRA suggested that the Commission approve only a small portion of this project.
While DRA presented a solid argument in opposition to most of this project, we remain concerned about the public health and safety issues related to the fire hydrants. Golden State alleges that this project is necessary to "upgrade this system to improve fire flow to comply with local fire codes and to comply with Commission standards for fire flow. In addition, looping the system to improve water circulation and fire flow is a public health and safety issue." (Golden State Opening Brief, p. 14.) Accordingly, we approve of this project in full as proposed by Golden State.
Golden State proposes to establish two interconnections with the Los Osos Community Service District (LOCSD). These interconnections, named the 10th Street Interconnection-LOCSD and the Nipomo-Santa Ynez Interconnection-LOCSD, will provide the necessary operational flexibility to shift pumping patterns from the lower zone, where seawater intrusion is occurring, and shift the pumping to upper zones to address nitrate contamination. As a result, according to Golden State, this project will improve significant basin-wide water quality issues that present challenges to sustainable water supply from the basin. (Golden State Opening Brief, pp. 14-15; Ex. GSW(ALL)-22; Golden State Reply Brief, p. 11.)
DRA objected to this project. DRA raised concerns about Golden State's cost estimate for its portion of the project. DRA claimed that the costs of the project should be divided between LOCSD, Sunset Terrace, a small mutual water company, and Golden State. In DRA's view, Golden State has failed to indicate how the cost of this project will be divided. DRA further questioned the veracity of Golden State's claim that this project will address contamination concerns. (DRA Opening Brief, pp. 36-38.)
We have reviewed the record and conclude that DRA's concerns lack merit. We want to encourage Golden State to improve water quality in situations where supply is limited. Accordingly, we approve of this project as proposed by Golden State.
Golden State proposes to recover costs associated with site construction and installation of certain equipment to enable Basin Water Ion Exchange at the Rosina Plant to treat nitrate-laden water from Skyline and Pecho wells. This project would enable Golden State to blend treated water with Rosina well source water before the water enters the distribution system. The project includes piping modifications, construction of concrete pads to support salt storage and waste vessels and accommodations for the Ion Exchange unit. Golden State stated that the various components of this project are needed to provide the operational flexibility to deal with the nitrate contamination and seawater intrusion problems relating to the Los Osos Groundwater Basin. (Golden State Opening Brief, p. 15; Ex. GSW(ALL)-22.)
DRA expressed concerns over costs and suggested that the funds could be better spent by buying land and drilling new wells. (DRA Opening Brief, p. 43.)
Based on the evidence in the record, we find sufficient information to justify the project. Golden State should proactively seek to improve water quality in areas, such as Los Osos, where water supply sources are limited to groundwater. Accordingly, this project is approved as requested by Golden State.
8.6. Ojai CSA
The Ojai CSA is located in the Ojai Valley within the northwest corner of Ventura County. It is located approximately fifteen miles north of the City of Ventura. The Ojai CSA is the primary water purveyor to the City of Ojai as well as some unincorporated areas outside the city limits including a portion of the community near Meiners Oaks, just west of Ojai. In 2008, the Ojai CSA is forecasted to serve 2,889 customers. (Section 3.01, Stipulation, attached hereto as Attachment A.) Water supply is furnished by five wells and five interconnections with the Casitas Municipal Water District. Consistent with the procedural history of the other CSAs, the Commission reviewed a GRC for the Ojai CSA in D.05-05-025 and has since approved of several rate changes via advice letters.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Ojai |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Depreciation Expenses |
$354,600 |
$666,500 |
$311,900 |
Rate Base |
$11,090,700 |
$12,561,500 |
$232,000 |
Supply Expenses |
$399,800 |
$627,500 |
$227,700 |
Cost of Capital |
8.74% |
9.41% |
$151,900 |
Other Maintenance Expenses |
$130,500 |
$267,900 |
$137,400 |
For all the reasons indicated above, we approve of a rate increase with the exception that service quality will improve in the near term.
As noted in the Stipulation, the parties compromised on a number of matters. However, certain matters related to capital budget remain in dispute. In addition, the City of Ojai testified in favor of efforts to reduce the incidences of water main breaks. (Ex. OJ-1; Ex. OJ-2; RT 652.) We seek to address these concerns as we decide the disputed items below. First, however, we address the specific situation in Ojai, as described to us by the City Manager of the City of Ojai.
The City of Ojai expressed concern that rate increases in Ojai would not be accompanied by an increase in customer service and water quality. While we expect to see improvements in water quality and service reliability as a result of the projects approved herein, we understand the residents are frustrated. Accordingly, we direct Golden State to meet with the City of Ojai, at the City's invitation, to discuss matters related to water quality and service reliability. Furthermore, we direct the City of Ojai to contact the Director of the Water Division with any unresolved concerns regarding water quality and service reliability at the conclusion of these meetings. Then, the Director of the Water Division shall recommend a procedure to the Commission for investigating this matter further.
Golden State proposes to recovery costs associated with replacing the water-lubricated pumps at the Gorham and San Antonio No. 4 Wells with submersible pumps. Golden State claims this replacement is necessary because the pumps fail to function properly. (Golden State Opening Brief, p. 16; Ex. GSW (ALL)-22.)
DRA suggested that Golden State should have known that water-lubricated pumps would not properly function at the deep well. Accordingly, DRA requests complete disallowance of the amount needed to replace the pumps. (DRA Opening Brief, p. 68.)
Based on the evidence, it appears that Golden State, in fact, did not know that water-lubricated pumps would fail to work properly in a deep well. Therefore, we reject DRA's basis for disallowance. The project is approved as proposed by Golden State.
Golden State seeks funds to replace old, inoperative valves within the water distribution system. According to Golden State, such replacements are needed to reduce the impact on customers when field operations personnel perform emergency shutdowns and to aid with system flushing which, to some extent, improves water quality. (Ex. GSW(ALL)-22.)
On the basis of data provided by Golden State on its historical replacement rate of valves in the Ojai area, DRA claimed that Golden State will replace less valves than it claims within its budget. (DRA Opening Brief, p. 70.) Under DRA's recommendation, the Commission should only approve a budget to replace two valves per year in the Ojai CSA.
While we are convinced that Golden State has not replaced valves as rapidly as it proposes to in the future, we still approve of the requested amount. We provide this approval with the expectation that Golden State fully intends to replace valves in Ojai on a more expedited schedule. To the extent that valve replacement improves water quality and reliability, as claimed by Golden State, we find that these replacements will address concerns raised by the City of Ojai. Accordingly, we approve of this project as proposed by Golden State.
Golden State requests rate recovery for installation of service to infill lots that possess a service entitlement. DRA did not object to the project but suggested the costs are too high. DRA relied upon more recent data to calculate costs. (DRA Opening Brief at p. 71.) Because DRA is relying on more current cost figures and Golden State fails to justify its methodology, we accept DRA's suggestion. Accordingly, we approve of the project at the reduced costs presented by DRA.
8.7. Santa Maria CSA
The Santa Maria CSA is comprised of five systems: Orcutt, Nipoma, Tanglewood, Lake Marie, and Sisquoc. In 2008, this CSA will supply water to an estimated 13,254 customers in these five water systems. (Section 3.01, Stipulation, attached hereto as Attachment A.) The Santa Maria CSA is located in the counties of Santa Barbara and San Luis Obispo. These water systems and their primary sources of water are as follows: the Orcutt, Lake Maria, Nipomo, and Sisquoc systems obtain their entire water supply from groundwater sources within the Santa Maria Valley Basis. The Tanglewood system is a closed system and obtains its entire annual water supply from the State Water Aqueduct. Consistent with the procedural history of the other CSAs in Region I, the last GRC docket that established rates for the Santa Maria CSA was D.05-05-025 and since that decision, the Commission has approved several rate increases via advice letter.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Santa Maria |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Rate Base |
$20,424,400 |
$27,915,200 |
$1,166,500 |
Depreciation Expenses |
$1,044,300 |
$1,600,400 |
$556,100 |
Cost of Capital |
8.74% |
9.41% |
$333,200 |
Supply Expenses |
$1,375,000 |
$1,725,800 |
$350,800 |
Allocated GO Expenses |
$907,500 |
$1,178,700 |
$271,200 |
Labor Expenses |
$465,300 |
$712,900 |
$247,600 |
For all the reasons indicated above, we approve of a rate increase with the expectation that service quality will improve in the near term. As noted in the Stipulation, the parties compromised on a number of matters related to capital budget. However, certain items remain in dispute. We address these disputed items below.
Golden State seeks the recovery of costs associated with the purchase and installation of a diesel-powered generator to provide backup power for the Foxen Canyon Well pump.
DRA objected to the project. DRA claimed that existing storage capacity is sufficient in the event of a typical power outage, which only last a few hours. (DRA Opening Brief, p. 4.)
In response, Golden State pointed out that the Foxen Canyon Well pump is the only source of water to the Sisquoc system and emergency backup power is needed in the event of an extended power outage. (Golden State Opening Brief, p. 17; Ex. GSW(ALL)-22.)
We agree with Golden State. Providing backup power is a reasonable and prudent measure to ensure reliable supply to the Sisquoc system. Furthermore, the consequences of no longer having water in the water mains, dewatering the system, are significant and present a potential health risk to customers. This project is approved as proposed by Golden State.
Golden State is requesting funds to install landscaping at the La Serena Plant, as required by the California Environmental Quality Act of 1970 (CEQA) Environmental Study/Negative Declaration. Golden State also seeks authorization for funds for paving to provide all weather access to the site.
DRA objected on the basis that the project is an unauthorized rate burden. (DRA Comments, pp. 18-19.)
Upon close review of this matter, we conclude that Golden State has not acted improperly. As explained by Golden State, these projects are not yet in rate base for ratemaking purposes and Golden State seeks to obtain authorization for rate base treatment here. (Golden State Reply Brief, p. 3.) Accordingly, we authorize the project as proposed by Golden State.
Golden State is requesting funds for emergency replacement of pumps and motors, column extensions required due to declining pumping levels, and replacing pumps and motors operating at below acceptable efficiencies.
DRA claimed that Golden State failed to provide sufficient supporting data. (DRA Opening Brief, p. 10.)
In response, Golden State cited to specific information in its testimony and in its responses to data requests from DRA that support its request. (Golden State Reply Brief, p. 5.) Specifically, Golden State provided historical average spending patterns for the last ten years without inflation.
We find that Golden State provide sufficient information to carry its burden of proof on this issue. Accordingly, we approve of this project as proposed by Golden State.
Golden State seeks funds to increase the capacity of the Orcutt Hill Reservoir and the Orcutt Well. Golden State claims that it is experiencing a water shortage serving its current customers and a developer has proposed to construct approximately 700 homes in the Orcutt system. The developer will contribute to the costs of drilling the new well so that the well meets the developer's capacity needs.
DRA recommended disallowing this request. DRA claimed that Golden State has failed to prove that its existing customers are experiencing a water supply shortage. (DRA Opening Brief, p. 21.)
In response Golden State claimed that it has provided the necessary factual support that its existing customers together with the proposed development of the area will result in water shortages.
We have carefully reviewed the record and find that Golden State has carried its burden of proof on this matter. Accordingly, the project is approved as proposed by Golden State.
Golden State is requesting rate recovery for the purchase and installation of a diesel-powered generator at the Woodmere Plant. Two wells are located at the Woodmere Plant. These wells are major producers for the Orcutt system. The Orcutt system currently has no permanent back-up of power generation at the Woodmere Plant and is dependent on water storage at the Orcutt Hill Reservoir in the event of a power outage or other emergency. As a result, should an extended power outage occur, customers in this Orcutt system would be without water. According to Golden State, a generator at Woodmere Plant will permit the wells to continue to produce in such an emergency.
DRA recommended complete disallowance of the project even though DRA also pointed out that 10,000 or more customers rely on this water supply. (DRA Opening Brief, p. 19.) According to DRA's analysis, a power outage would have to last approximately five hours to deplete the water supply and such an occurrence is so unlikely that the costs for backup power are unjustified.
We disagree. The back-up power is needed to ensure adequate water supply to thousands of customers in the event of a power outage. While DRA claimed that such an event, lasting more than five hours is unlikely, we are not willing to take that risk. The project is approved as requested by Golden State.
8.8. Simi Valley CSA
The Simi Valley CSA is a single, interconnected system serving a portion of the City of Simi Valley and areas in eastern Ventura County. The CSA will supply water to an estimated 13,405 customers in 2008. (Section 3.01, Stipulation, attached hereto as Attachment A.) Water supply to the Simi Valley CSA is provided by two active wells and five connections to the Calleguas Municipal Water District. Groundwater supplied to Simi Valley comes from the Simi Valley Groundwater Basin and Golden State treats this water to improve water quality. To ensure that customers in this CSA continue to receive quality water, modern telemetry and water sampling stations are included in Golden State's proposed budget. As the other CSAs in Region I, the last GRC decision that established rates for the Simi Valley CSA was D.05-05-025, which approved rates for test years, 2005, 2006 and 2007. Since D.05-05-025, the Commission has approved several rate changes via advice letters. The expense levels in Simi Valley have not been comprehensively reviewed since 2000.
The five most significant issues, in terms of dollars, that result in the proposed rate increase are as follows:
Simi Valley |
Adopted by the CPUC in 2007 |
Test Year 2008 (Proposed by Golden State) |
Revenue Impact |
Purchased Water |
$4,519,500 |
$5,336,500 |
$817,100 |
Allocated GO Expenses |
$1,042,200 |
$1,385,000 |
$342,800 |
Labor Expenses |
$243,800 |
$471,000 |
$227,200 |
Purchased Power |
$238,700 |
$319,200 |
$80,500 |
Regulatory Expenses |
$45,900 |
$83,200 |
$37,300 |
For all the reasons indicated above, we approve of a rate increase with the expectation that service quality will improve in the near term. As noted in the Stipulation, the parties compromised on a number of matters. However, certain capital budget items remain in dispute. We address these disputed items below.
Golden State is seeking rate recovery to replace a motor control center at Rebecca Plant because of the age of the equipment and to meet current safety and code requirements. Golden State also seeks to replace the booster pumps because they have exceeded their useful life and the yard piping to accommodate the new booster and to meet current hydraulic demands.
DRA objected to the amount Golden State is seeking to recover but supported replacing the motor control center, booster pumps, and, in addition, performing additional electric work. (DRA Opening Brief, pp. 40-52.) DRA claimed that its three recommended projects can be accomplished for $108,000 and Golden State seeks $186,000 for two projects, the control center and booster pumps.
In response, Golden State noted that it agrees with DRA that additional electric work is needed, but Golden State decided to defer this work to lessen the rate impact of these projects. (Ex. GSW(ALL)-22.) Regarding the costs for the control center and pumps, Golden State claimed that DRA is relying on costs for equipment not properly suited to the site. (Ex. GSW(ALL)-22.)
DRA presents solid arguments but Golden State's claim that its costs are justified to properly equip the site are convincing. Accordingly, we approve of this project as proposed by Golden State.
Golden State is requesting funds for emergency replacement of pumps and motors, column extensions required due to declining pumping levels, and replacing pumps and motors operating at below acceptable efficiencies. DRA claimed that Golden State failed to provide sufficient supporting data. (DRA Opening Brief, pp. 52-54.) In response, Golden State cited to specific information in its testimony and responses to data requests that support its request. (Golden State Reply Brief, p. 5.) Specifically, Golden State provided historical average spending patterns for the last 10 years without inflation. We find that Golden State provided sufficient information to carry its burden of proof on this issue. Accordingly, we approve of this project as proposed by Golden State.
Golden State seeks funds to increase the capacity of the Runkle Canyon Storage Tank, a tank being built by the developer of Runkle Canyon, to address the need for redundant storage for peak hours, fire flow and emergency demand in the lower pressure zones of the Simi Valley CSA.
DRA claimed that Golden State has failed to carry its burden of proving the necessity for this project. (DRA Opening Brief, p. 53.)
DRA's claim is not convincing. Persuasive support for this project exists in the evidentiary record. (Ex. GSW(ALL)-8; GSW(SV)-3; GSW(ALL)-22.) Specifically, the increased storage capacity will address low pressure issues experienced by customers at the highest elevations in the Pineview Booster Zone and aid in meeting emergency demand in that area. Accordingly, this project is approved as proposed by Golden State.
Golden State is requesting rate recovery for the purpose of replacing obsolete fire hydrants located in the older sections of the distribution system.
Based on Golden State's failure to replace hydrants in the past, DRA recommended disallowing this request. (DRA Opening Brief, p. 58.)
We remain concerned about the public health and safety issues related to the fire hydrants. Golden State alleged that this project "will increase firefighting capabilities." (Golden State Opening Brief, p. 20; Ex. GSW(ALL)-8.) Accordingly, we find this project necessary to adequately protect public health and safety. We approve of this project as proposed by Golden State.
Golden State is seeking rate recovery for replacing 30-year old plastic service lines that have exceeded their useful life. These pipes leak with regularity. (Golden State Reply Brief, p. 20.)
DRA claimed that, according to Golden State's data, continuing to repair the lines is a more cost-efficient than replacing them. (DRA Opening Brief, p. 59.)
In response Golden State pointed out that, in this area, 30 service line leaks and failures have been repaired in the past nine years. Golden State seeks to replace all the original 30-year old lines, which would amount to 45 lines per year. (Ex. GSW(ALL)-8.)
We support Golden State's proactive efforts to replace aging infrastructure on a regular and planned basis rather than continuing to respond to line breaks. Accordingly, this project is approved as proposed by Golden State.
Golden State is requesting rate recovery for removal and site razing of the Crater Tanks. The tanks have deteriorated beyond their useful life.
DRA claimed that Golden State has failed to prove the necessity for this work or support the requested costs. DRA suggests that the job could be accomplished at much less expense. (DRA Opening Brief, p. 61.)
In response, Golden State suggested that DRA relied on inaccurate data to form its conclusions. (Golden State Reply Brief, p. 22.)
DRA's presentation on this matter is strong but not convincing. We understand that the Tanks have reached the point where Golden State is concerned with their imminent failure. (Ex. GSW(ALL)-8.) Accordingly, we support this project as proposed by Golden State.
Golden State seeks rate recovery to cover a portion of distribution improvements identified by the Niles Study, a study conducted by CH2MHILL, which indicates that Golden State can take steps to optimize groundwater production. To achieve this goal, Golden State must make modifications to the exiting well pumps, booster pumps, control system and plant piping. (Id.)
DRA opposed this project based on Golden State's failure to prove that the project is needed to address total dissolved solids when only a few customer complaints have been recorded on this matter. (DRA Opening Brief, p. 65.)
In response, Golden State pointed out that the project will reduce costs to ratepayers and increase system reliability by decreasing Golden State's reliance on purchased water. According to Golden State, the project is not specifically targeted at reducing total dissolved solids. (Golden State Opening Brief, p. 21.)
We support Golden State's efforts to increase system reliability while decreasing costs for ratepayers. Accordingly, the project is approved as proposed by Golden State.
