• California Water Service
    2014 General Rate Case

    Background

    On July 5, 2012, Cal Water filed its General Rate Case Application for its General Office and 23 water districts, requesting approval to increase revenues by: 

    • $92.7 million or 19.4% in 2014
    • $17.2 million or   3.0% in 2015
    • $16.9 million or   2.9% in 2016

    The CPUC held Public Participation Hearings in April and May 2013 in Cal Water’s various service territories across California. On October 30, 2013, ORA, Cal Water and other intervenors filed a Settlement with the CPUC, coming to consensus on all but two issues, which would result in a rate increase of 9.2% in 2014: 

    • Forecasted Sales: Determined the sales by customer class for the first year using ORA’s per customer sales estimates as they align with sales trends and using Cal Water’s estimated number of customers for most districts.
    • Expenses: Reduced estimates for Conservation, Taxes, and Capital Budgets.
    • Rate Support Fund: Increased the Fund discount structure, which will result in higher credits to eligible districts. 
    • Low Income Rate Assistance Programs (LIRA): Set LIRA benefit (credit) equal to 50% of the monthly service charge; however, the current $12.00 cap to this benefit was increased to $18.00 for non-Rate Support Fund (RSF) Districts and $30.00 for RSF Districts. The RSF mechanism was established for California Water Service to provide additional subsidies to districts that have a significant number of low income customers and that have affordability issues. 

    The remaining unresolved issues were regarding whether or not to grant Cal Water’s proposed Sales Reconciliation Mechanism, which would adjust adopted sales annually by half of the difference between the actual and adopted sales from the prior year. Accordingly, there would be an adjustment to sales in the second and third year of Cal Water’s rate case cycle, which would bring adopted sales more in line with the previous year’s sales.  

    On August 18, 2014, the CPUC issued its Final Decision adopting the Settlement and resolving the Sales Mechanism Reconciliation Mechanism by granting a pilot program for a Drought Sales Reconciliation Mechanism and associated balancing account to track costs. The
    approved Settlement will result in these increases for customers. 

    • 2014: $45,328.6 million or 9.2% 
    • 2015:  $10,109.8 million or 1.9% 
    • 2016:  $10,011.6 million or 1.8% 
    • Cumulative Total = $65,450 million increase over three years.

    Because Cal Water’s rate increase was not granted until August, 2014, and the CPUC had previously authorized interim rates, a memorandum account was used to track the difference between rates billed to customers and the final rates approved by the CPUC. Cal Water will use this account to reconcile back to January 1, 2014, and customers’ bills will be adjusted accordingly. 

    Cal Water is expected to file its next General Rate Case with the CPUC in July of 2015. 


    ORA’s Policy Position

    ORA supports the Settlement because it will provide Cal Water with the funds needed to run a safe reliable water service while reducing Cal Water’s 2014 GRC revenue requirement increase by over $36 million. This will save Cal Water’s customers about $6.68 per month. Given that the CPUC adopted the Drought Sales Reconciliation Mechanism as a pilot program, ORA anticipates better understanding how this mechanism is implemented and analyzing the impacts of the mechanism on customers during the three-year cycle. However, the Drought Sales Reconciliation mechanism will adjust customers’ rates outside of the general rate case and the impact of these adjustments cannot be precisely estimated.  

    See summary Table comparing Cal Water's request with DRA's recommendations, by water district.

    See full listing of DRA’s March 1, 2013 Testimony of Results of Operations, by district.

    See ORA’s November 27, 2013  Opening Brief.

    See ORA’s January 6, 2014 Reply Brief filed.

    See ORA’s November 27, 2013 Comments.

     

    Proceeding Status

    A final CPUC Decision is expected in 2014.

    See the proceeding docket.