The Settlements

The KRVWC, AVWC and Dominguez SBD settlements are Attachments A, B and C to this decision.

Table 1 compares Applicants' and RRB's initial positions on revenue requirement increases for test years 2000 and 2001 and attrition year 2002 with what they propose in the settlements.

Table 1

Revenue Requirement Increases

	Utility Requested		RRB Recommended		Settlement/Adopted
	$	%	$	%	$	%
KRVWC
2000	609,700	31.36	225,900	16.38	327,000	23.71
2001	31,900	1.61	85,700	5.34	67,000	3.93
2002	2,200	0.11	(45,800)	(0.27)	64,800	3.66
AVWC
2000	354,200	36.98	199,800	32.98	248,500	39.39
2001	38,200	3.84	(23,900)	(3.05)	25,500	2.90
2002	3,300	0.33	(2,570)	(0.33)	22,300	2.46
Dominguez SBD
2000	3,609,800	13.26	(49,800)	(0.21)	840,900	3.56
2001	488,900	1.76	(216,600)	(0.91)	243,000	0.99
2002	35,500	0.13	---	---	25,710	0.10

Each settlement indicates the areas of major difference between the settling parties' initial positions and summarizes how those differences were resolved. Where Applicants initially sought a return on equity of 10.67% and RRB advocated 8.54%, settlement revenue requirements were based on an agreed-upon 9.95% return on equity, including a 0.25% return premium to reflect a portion of the savings ratepayers receive from parent Dominguez's acquisition of various small systems. That return on equity, combined with the capital ratios and cost of debt set forth in settlement Sections 8.00, yields returns on rate base of 9.26% for 2000 and 9.23% for 2001 and 2002.

Applicants and RRB propose the Commission adopt the summaries of earnings set forth in the respective settlement Appendices A to produce those returns, and the underlying quantities supporting them in Appendices D.

If KRVWC were to impose rates based on its full settlement revenue requirement in each year, it would need average increases in 2000, 2001 and 2002 of 23.71%, 3.93% and 3.66%. For AVWC the increases would be 39.39%, 2.90% and 2.46%. To soften the rate shock in the first year, Applicants and RRB propose increases levelized over the three-year period as shown in Table 2.

Table 2

Levelized Revenue Increases

Imposing these increases for a full twelve months in each of the three years would produce the same revenues for Applicants, after adjustment for interest on amounts deferred, as the settlement revenue requirement changes in Table 1. However, because the rates for 2000 would not go into effect on January 1, 2000, the revenues actually collected under levelized rates would fall short of those shown. The settlement does not propose levelized rates for Dominguez SBD because the normal increases would be small each year.