California American Water
2015 General Rate Case

Background 

On July 1, 2013 California American Water (Cal Am) filed its Application with the CPUC requesting approval to increase customer rates from 2015 – 2017: 

  •  2015:  $18.5 million or 9.55% increase
  •  2016:  $8.3 million or 3.90% increase
  •  2017:  $6.7 million or 3.02% increase

The main drivers of the proposed rate increases are capital investments, depreciation, general office costs, operating and maintenance costs, taxes, and reduced water sales. Cal Am’s water districts include Larkfield, Sacramento, Monterey Main, Monterey Toro, Garrapata, Monterey Wastewater, Los Angeles County, San Diego County, and Ventura County.

On October 9, 2013 Cal Am filed its 100 day update to its Application. On October 1, 2013, Cal Am filed Supplemental Testimony with its rate design proposal for all districts except Monterey.  On December 1, 2013, Cal Am filed its Testimony with its rate design proposal for the Monterey District. 

The CPUC issued a Ruling on March 7, 2014 setting the schedule for Public Participation Hearings throughout the state in Cal Am districts from April 23 – May 19, 2014. See ORA's Public Events page.

Evidentiary hearings are scheduled to be held at the CPUC June 15 - 30, 2014. 

 

ORA Policy Position

ORA recommends an overall 3-year decrease in Cal Am revenues of 2.3%, based on its detailed analysis of Cal Am’s request, including these key areas:

  • Revenues: ORA used 5-years of recorded consumption data, compared with Cal Am’s 3 years, and found that given Cal Am’s revenues from proposed fees and higher water consumption that forecasted revenue should be 5% higher than the utility estimates.
  • General Office Expenses: ORA finds that this expense should be 19% lower than Cal Am’s estimate, given that the utility’s legal and administrative forecasts are more than double the average of other comparable water utilities.
  • District Operating Expenses: ORA removed duplicative multipliers which inflated Cal Am’s estimates.
  • District Plant & Ratebase: While ORA included more than 90% of Cal Am’s plant estimates in this category, given the magnitude of the utility’s plant and infrastructure costs in this area, this category accounts for ORA’s largest proposed decreases to revenue estimates.

Based on these findings, ORA recommends:

  • 2015: -$9.9 million or -5.1% revenue decrease
  • 2016:  $3.4 million or 1.6% revenue increase
  • 2017:  $2.9 million or 1.3% revenue increase

ORA protested Cal Am’s proposal because Cal-Am’s revenue calculations are inconsistent with its current tariffed rates charged to customers.  Cal-Am’s Application includes 33 special requests.  Its revenue projections do not incorporate all of the earnings it may realize from its various “special request” proposals.  Many of these special requests are for additional fees, surcharges, or memorandum accounts, which, if approved, will lead to additional increases in customer bills. 

See the Comparison Table by Cal Am water district.

ORA also addresses numerous Cal Am special requests, which are outlined in ORA’s Executive Summary.

See ORA’s March 28, 2014 Testimony for full details of ORA’s findings and positions.

See ORA’s August 5, 2013 Protest.

 

In fall 2013, ORA conducted field visits to Cal Am’s various service territories, offices, and plants as part of its audit of Cal Am’s request to increase customer rates.  During these visits, it came to ORA’s attention that Cal Am had failed to complete a significant number of previously authorized projects – far more than the five projects Cal Am had identified in its CPUC Application, for which Cal Am customers had already paid.

Consequently, ORA filed a Motion with the CPUC to open a companion proceeding to investigate Cal Am as potentially violating the CPUC’s Rule 1.1, which requires the utilities it regulates to be forthcoming and not mislead the Commission.

See ORA's March 17, 2014 Brief.

See ORA's March 28, 2014 Reply Brief.

See ORA’s November 12, 2013 Motion for a Companion Order Instituting an Investigation.

 

 

Proceeding Status

See the Proceeding docket. 

 

Other Resources

ORA Cal Am Archives