5. Allocation of GO Costs to Non-GRC Districts

SCWC requests that the General Office (GO) costs adopted in this Region III GRC be allocated to the Region III districts as well as to the non-GRC districts (those districts in Region I and Region II). For the non-GRC districts, SCWC proposes to increase rates only for the incremental allocation of GO costs above the level of GO costs already incorporated into their rates. ORA recommends that SCWC's request be denied because a GO adjustment for non-GRC districts would provide SCWC rate increases for the GO cost twice, GO costs require a thorough review beyond what is given offset costs, and the request goes against the rate case processing plan.

We conclude that SCWC's proposal should be denied. For the non-GRC districts, SCWC's showing neither details the embedded expenses and capital costs for the various test and attrition years, nor explains how such costs should be determined. Also, for capital costs estimated in this GRC, the rate base amounts, net returns and income taxes related to GO plant additions are not separately identified from the non-GO amounts. We therefore cannot determine the reasonableness or accuracy of SCWC's incremental proposal. We will instead adopt ORA's recommendation that GO recovery should be determined in the GRC for each region. This methodology was used for SCWC, previous to the test year 2000 Region III settlement, and does not depend on incremental changes to GO expenses and capital costs.