Meeting Date:

October 21, 2013







David J. Stoldt,




General Manager

Line Item:



Prepared By:

David J. Stoldt

Cost Estimate:



General Counsel  Review:  N/A

Committee Recommendation:  N/A

CEQA Compliance:  N/A


SUMMARY:  California American Water Company (Cal-Am) has filed its Application A.13-07-002 with the California Public Utilities Commission (CPUC) for its rate case covering the years 2015, 2016, and 2017.  District staff has submitted testimony in support of Cal-Am’s budgets and activities related to conservation program expenses and Carmel River mitigation expenses.


District staff has also performed a preliminary evaluation of other Cal-Am requests in the Application where District interests may be affected.  Division Managers, the General Manager, and District’s General Counsel met to discuss the key areas of interest and formulated initial staff recommendations.  These are identified under “DISCUSSION” below.


RECOMMENDATION:  The General Manager recommends that the Board provide direction to staff on which of these areas should be pursued for further investigation and what the basic position of the District should be on each.




Request by Cal-Am for recovery of District expenses to be reimbursed by Cal-Am for District conservation program activities and District’s Carmel River mitigation program.  Division Managers Pintar and Prasad have already entered testimony in support of these reimbursable expenditures.  Staff recommends future filings and testimony vigorously support these elements.


Special Request #5: California American Water requests authorization to establish a connection fee for all areas in all districts where a special facilities fee or connection fee does not currently exist.  Staff recommends that the District oppose on the grounds that it is untimely and should be covered in the next rate case or in a second phase of the water supply project CPCN application.  Also, if a connection fee is to be considered the District believes a more rigorous methodology be applied, requiring funding of an outside rate consultant by Cal-Am.


Special Request #12: California American Water requests authorization to recover leak adjustments as part of general metered rates. Staff recommends that the District oppose without better analysis and technical data supporting the quantification of leaks.


Special Request #13: California American Water requests authorization to increase the authorized cost per acre foot of delivered water produced at the Sand City Desalination Plant, as authorized by D. 13-04-015. Staff analyzed Cal-Am testimony and recognizes that the request is based on increases in costs related to the Sand City plant, and therefore recommends support for this request.


Special Request #16: California American Water requests authorization to implement a Consumption Adjustment Mechanism. In its 2010 General Rate Case, Cal-Am proposed that annual consumption per customer be adjusted on an annual basis to ensure the incorporation of conservation program achievements into every annual period’s projections. Cal-Am proposes a process to adjust demand based on a timely forecast for each year of the three-year rate case period.  Staff recommends the District take no position on this issue or support.


Special Request #17:  California American Water requests authorization to recover rate case expense on a specific annual amount to better match the recovery in the revenue requirement with the expense incurred.  Cal-Am requests that the authorized level of rate case expense be amortized over 27 months instead of 36.  Staff recommends the District take no position on this issue or support.


Special Request #18: California American Water requests authorization to file for the establishment of a memorandum account to track all penalties and fines that could be assessed as a result of a violation of the State Water Resources Control Board Cease and Desist Order, should such an account be necessary. In its testimony, Cal-Am states it “fully intends to petition the SWRCB to modify the final physical cliff implementation by justifying that it has complied with all the provisions of the CDO and done everything it could to meet all the conditions.”  Cal-Am further states, that the CPUC “has revised the proceeding timing and has issued a revised proposed schedule that now does not meet the SWRCB requirement. This was a situation that was beyond the control of California American Water.”  Staff disagrees with the stated causes of delay and believes it insufficiently details what role, if any, Cal-Am may have played in the delay.  Further one cannot now predict the conditions and causes of future violations, and who the causing agent may be.  The CDO will be petitioned for change in the future, which could forestall any fines and penalties and the outcome of such petition is not known.  The time is not ripe to address fines and penalties as ratepayer expense and should be addressed in a separate application of Cal-Am to the CPUC in 2016 when more is known.  Staff recommends opposing this request.


Special Request #19:  California American Water requests authorization to continue its Monterey County District Rationing memorandum account.  Staff recommends that the District support this request and specifically add any similar District expenditures incurred under the implementation of joint programs to be included under the memorandum account and reimbursed to the District.  Cal-Am requests this rationing memorandum account to track the Company’s own rationing related expenditures should rationing in the Monterey County District occur. Such expenses would include "unbudgeted ... activities mandated for rationing." The Commission initially approved this memorandum account in D.03-02-030 and re-confirmed it in D.08-07-010 and D.09-05-029.


Special Request #20:   California American Water requests authorization to combine multiple general metered services to a single residential structure into a single consolidated bill. Where a residential customer with multiple services/meters serving one parcel of land is being billed each individual meter charge based upon meter size (as currently done) but have the usage of both meters, California American Water proposes that those meters be consolidated and billed according to the residential tiered rate tariff or individual water allocation. This revised billing practice would avoid customers being billed at lower tier usage rates for usage on both meters serving one premise providing an unfairly lower cost.  Staff recommends further review by the District and to provide testimony identifying any concerns, which might be support for this request.


Special Request #21: California American Water requests authorization to clarify how compound and multiple meters should be billed. Compound Meters are used where both high flow rates need to be measured as well as – at times - smaller rates of flow need to be accurately accounted for. There are a number of different set ups and types of compound meters. Staff would like to discuss the Cal-Am proposal with affected property owners in the community to determine if the proposal meets their needs and then provide testimony in support or in opposition based on what is learned from such outreach.


Special Request #22:  California American Water requests that the Commission increase the net salvage factor to negative 25% in order to gradually accumulate funds to remove the Los Padres Dam.  District staff recommends opposing this request because it believes a decision to fund dam removal requires CEQA review because it predetermines the outcome of a project EIR.  The accumulation of funds is not timely until a future analysis of options for the future of Los Padres Dam has been executed. 


Special Request #26:  California American Water requests authorization to remove the "Pilot" designation from its Conservation Programs. Cal-Am’s testimony states “There is no indication that the Commission, or any Local, State or National organization, is going to reverse course and ask water utilities to disregard conservation and conservation programs. While general changes may be necessary in the rate design or conservation programs, it is time to let go of the concept that these programs are pilots. To show support for the direction and goals of conservation, it is time to move forward and engrain into regulation, now and into the future, the assertion that conservation is a necessity.”  District staff agrees and recommends support of this request.


Special Request #28:  California American Water requests authorization to consolidate all Monterey small water systems for ratemaking and billing purposes. Cal-Am proposes to consolidate all the non-Seaside Basin/Carmel River aquifer systems in Monterey into a single tariff ratemaking area.  This appears to include Toro, Ambler Park, Chualar, Ralph Lane, and the Garrapata system.  If confirmed to have no impact on the District service area, Staff recommends the District take no position on this issue or support.

Special Request #32: California American Water requests that it be authorized to track in the Monterey County District’s WRAM/MCBA all lost revenues associated with the loss of sales to certain City of Pacific Grove properties as the City plans to build, own, operate, and distribute water to these properties from a yet to be constructed water reclamation facility which will be located on City property. Staff recommends the District oppose this request.