Docstoc

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Document Sample
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Powered By Docstoc
					WATER/ABJ/HJL:jlj

   PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

WATER DIVISION                                    RESOLUTION NO. W-4192
Water Advisory Branch                                        June 8, 2000

                                RESOLUTION

    (RES. W-4192), PENNGROVE WATER COMPANY (PWC). ORDER
    AUTHORIZING AN OFFSET RATE INCREASE PRODUCING AN
    ADDITIONAL ANNUAL REVENUE OF $14,544 OR 5% IN ITS
    PENNGROVE SERVICE DISTRICT, AND $27,874 OR 111% IN ITS
    CANON MANOR SERVICE DISTRICT, SPREAD OVER A 3-YEAR
    PERIOD IN INCREMENTS OF APPROXIMATELY 78%, 16.5%,
    AND 16.5% PER YEAR.


SUMMARY

By Advice Letter No. 41, filed March 15, 2000, PWC seeks to increase rates to
recover costs in capital investment in water utility plant. This resolution grants
an increase in gross annual revenue of $42,418 or 24.19% to recover costs
associated with capital improvements mandated by the Department of Health
Services (DHS). The increase will not result in a rate of return higher than the
rate of return authorized in PWC’s last general rate increase (Res. W-3953, dated
November 21, 1995). This resolution grants the request.


BACKGROUND

PWC requests authority under Section VI of General Order 96-A and Section 454
of the Public Utilities Code to increase rates in order to offset $42,418 for capital
improvements. PWC presently serves approximately 404 metered customers in
Penngrove and 67 metered customers in Canon Manor, Sonoma County.

The present rates became effective September 27, 1999, pursuant to Advice Letter
No. 40, which authorized an offset rate increase of $7,429.38 or 2.6%.
Resolution W-4192                                                        June 8, 2000
PWC/AL 41/ABJ/HJL:jlj




DISCUSSION

PWC is comprised of two separate, unconnected service districts, Canon Manor
and Penngrove. Canon Manor, consisting of 67 customers, has its own well,
pumping, treatment, and storage facilities. Penngrove, consisting of 404
customers, is supplied exclusively by water purchased from the Sonoma County
Water Agency.

PWC has completed the installation of a 166,500-gallon storage tank and the
improvement of its distribution system pumping in Canon Manor in order to
meet current storage and fire-flow requirements mandated by DHS per letters
dated October 2, 1997 and January 22, 1999. The following costs were incurred:

       Canon Manor Tank Project                  $ 139,656.85
       Distribution System Pumping
         Improvement Project                        35,696.17

              Total Plant Additions               $175,353.02

All of the improvements were made in Canon Manor. Although Canon Manor
and Penngrove are separate service districts, Penngrove does benefit from the
Canon Manor service district being in the PWC service area through economies
of scale and in the sharing of operation and maintenance costs. Therefore, PWC
apportioned about 34% of the revenue requirement necessary to offset the costs
associated with the plant improvement projects to Penngrove. This translates to
a $14,544 or 5% increase for the Penngrove service district customers and a
$27,874 or 111% increase to the Canon service district customers. As the Canon
Manor area develops, PWC plans to merge the two districts into one system
where all facilities will benefit the entire system. PWC’s proposal of sharing of
the costs of the improvements in this resolution is a step toward its ultimate goal
of merging to two districts. The Commission’s Water Division (Division)
concurs.

The Penngrove system and the Canon Manor, both in Sonoma County, are
separated by less than two miles, approximately 8,000 feet. Penngrove has a
request with the DHS to borrow Safe Drinking Water Bond Act monies for that
connection which will augment water supply for Canon Manor and the proposed
West Canon Manor area where 200 plus homes are proposed. If the DHS
funding does not become available, the time table for interconnection will be
delayed, but will ultimately be made 2 years later. In either case, when these two




                                         2
Resolution W-4192                                                       June 8, 2000
PWC/AL 41/ABJ/HJL:jlj

parts of the Penngrove system are interconnected, there will be improved water
quality and water supply as well as better fire protection.

To lighten the rate impact on Canon Manor customers, PWC proposes to spread
the $27,874 or 111% increase over three years in the following manner: First year
$19,512 or 78%, second year $4,181 or 16.5%, and third year $4,181 or 16.5%. The
spread of the rate increase over three years in order to soften rate shock is
consistent with Division policy of minimizing rate shock when a significant rate
increase is necessary.

At the recommended rates, the monthly bill for a typical metered customer in the
Penngrove service district using 13 Ccf will increase from $52.75 to $55.75 or
5.7%. The monthly bill for a typical metered customer in the Canon Manor
service district using 20 Ccf will increase from $31.20 to $55.46 or 77.7% in the
first year, from $55.46 to $60.65 or 9.4% in the second year and from $60.65 or
$65.85 or 8.6% in the third year.

Service is satisfactory. There are no Commission orders requiring system
improvement, nor are there service problems requiring corrective action.


NOTICE AND PROTESTS

A notice of this proposed increase was mailed to each Canon Manor customer on
March 10, 2000. PWC also published a notice in the Press Democrat, a
newspaper of general circulation in the area. There were six letters of protest to
which the Branch will respond in writing.


FINDINGS

THE COMMISSION finds, after investigation by the Division, that:

1. The rate increase proposed by PWC is just and reasonable to recover the
   costs associated with DHS mandated storage tank and pump additions.

2. The cost allocation between service areas is just and reasonable.




                                        3
Resolution W-4192                                                           June 8, 2000
PWC/AL 41/ABJ/HJL:jlj




IT IS ORDERED that:

1. Penngrove Water Company is authorized to make effective the rate
   schedules, schedules P-1, Metered Service, and CM-1, Metered Service,
   attached to Advice Letter No. 41 and concurrently cancel its presently
   effective rate The effective date of this advice letter shall be five days after
   the date of this resolution.

2. This resolution is effective today.


I certify that this resolution was adopted by the Public Utilities Commission at its
regular meeting on June 8, 2000. The following Commissioners approved it:




                                                    WESLEY M. FRANKLIN
                                                      Executive Director

                                           LORETTA M. LYNCH
                                                            President
                                           HENRY M. DUQUE
                                           JOSIAH L. NEEPER
                                           RICHARD A. BILAS
                                           CARL W. WOOD
                                                            Commissioners




                                          4