audit. Applicant does not take issue with this adjustment. The $0.8 million reduction is the net effect of reclassifying some WRAM revenues to the Leak Adjustment Memorandum Account, excluding some WRAM surcharge revenues that had inadvertently been booked to billed revenues, and a small adjustment to MCBA. The PwC audit is reasonable, and we adopt this adjustment. PWN/RL Adjustments PWN/RL conducted its own study and finds only five million dollars of the $40.6 million is reasonably recoverable. PNW/RL calls its study an audit, and says it is based on the use of three methods: Method 1: Crosscheck data in 20102014 reports submitted to the Commission against recorded results provided by CalAm in data responses to PNW/RL. Method 2: Use of CalAm’s cost of service and rate base reports to calculate the extra money needed (or the excess money collected) to reach applicant’s authorized 8.41 percent rate of return over 2010 to 2014. Method 3: Compare CalAm’s authorized revenues to its annual reports for 20102014 adjusting for already collected surcharges. We are not persuaded. Key PNW/RL exhibits included incomplete data, used results that were not attributed to the right year, and applied revenues unrelated to WRAM. (RT Vol. 5 (May 13, 2016) at 771773.) We are neither convinced that the “audit” conducted by PWN/RL was accurately and properly performed, nor that it was conducted with proper due diligence. PNW/RL assert that the WRAM/MCBA calculation itself: …is flawed via items that are left out, such as fixed cost reductions, accounting methodology for cost recognition, posttax vs. the pretax value of costs, the value of transactions between the Monterey
6.) The issue of applicant’s culpability for population growth and the resulting increase in water cost is beyond the scope of the proceeding. Even if relevant (which it is not), a utility under Commission jurisdiction has a duty to provide reasonable service to its customers. (Public Utilities Code Section 451.) PWN/RL fail to show that applicant’s provision of water service was anything other than in compliance with its statutorily required public utility obligation. Finally, are many factors that can result in population growth in a particular area, all of which are beyond the control of applicant (e.g., demographic trends, economic cycles, zoning decisions, government policies). PWN/RL separately call for a formal Commission investigation into applicant’s responsibility for the water demand that was fed by its production of water. We see no need. Moreover, PNW/RL fail to realistically explain what it would recommend be done with the results even if the investigation found applicant contributed in some way to the growth in water demand. In short, we are not convinced by the showing and arguments of PWN/RL. Moreover, PWN/RL’s hyperbolic claims diverted the limited time and resources of parties and the Commission from important work, as explained more below. Amortization We with applicant, District, and ORA that the recovery should be over the shortest time reasonably feasible. We also agree with applicant that we must mitigate rate shock to the degree possible. We find that amortization over five years is the best balance. Applicant’s authorized 2015 annual revenue requirement is about
with interest at the 90day commercial paper rate, and will be collected by a single monthly surcharge based on meter size using our standard meter ratios. The balances and appropriate adjustments must, of course, be clearly and fully explained in the advice letter seeking to implement the monthly surcharge. 4.6.3. PWN/RL: Customers During 2010 through 2014 PWN/RL recommend that the underrecovered balance be collected from current customers who were customers any time during 2010 through 2014. For the reasons stated below, we do not adopt this recommendation. PWN/RL would narrow the recovery to certain customers by exempting residential customers if: “They were not customers for any of the 5 years from 20112014,” or “For years they were customers, can support their Allotment Claims for any year from 20102014 with records from employment, business…school records...utility bills…. All others must pay the amortized amount…PLUS the amount to be refunded to those customers having verified their allotments, who deserve refunds of surcharges they have paid to date [emphasis in original],” or “They are customers whose service started after Dec 31, 2014 from whom CalAm would be collecting WRAM/MCBA surcharges they do not owe.” Further, PWN/RL propose that customers who are not completely exempted be given the choice of repayment as either an: Immediate lump sum payment or Payment over 3, 10, or 20 years. PWN/RL’s proposal is complex. The process be timeconsuming and
provide customer notice and explanation of the rate changes, with the notice first reviewed by the Commission’s Public Advisor. Future Water Revenue Adjustment Mechanism/Modified Cost Balancing Account (WRAM/MCBA) advice letters filed and served by CaliforniaAmerican Water Company (Cal-Am) for the Monterey District shall request recovery of undercollections (or refunds of overcollections) by a uniform surcharge (or surcredit) on each unit of water sold (volumetric rate) including Tier 1. This applies to all WRAM/MCBA balances recovered once the new rate design is implemented. CalAm shall provide customer notice of each such advice letter consistent with General Order (GO) 96B. In addition, for each of the next three advice letter requests, CalAm shall notify all customers in the Monterey District by bill insert or direct mail of the request even if that notice is not otherwise required by GO 96B. The Notice shall be approved by the Commission’s Public Advisor before it is issued by Cal-Am. CaliforniaAmerican Water Company (Cal-Am) shall, within 60 days of the date of this decision, file a Tier 2 advice letter in conformance with General Order 96B. The advice letter shall include tariffs for the Monterey District that: (a) eliminate the residential allotment system, (b) recover 30 percent of residential customer fixed costs in the residential monthly service charge, (c) use the temporary modification to standard residential meter ratios recommended by Cal-Am for recovery of the increased percentage of fixed costs in the residential monthly service charge, (d) use the standardized residential rate design recommended by Cal-Am in which each customer gets the same amount of water in each tier at the tier break points and modified block widths, (e) reduce the