• Great Oaks Water Company 2019 General Rate Case (GRC)



    Background


    Great Oaks Water Company’s (GOWC’s) water system is located in South San Jose, California and consists of one consolidated service area, serving approximately 21,300 service connections.

    On July 2, 2018, GOWC submitted its Application (A.18-07-002) to the California Public Utilities Commission (Commission) requesting authorization to increase rates for water service over present levels:

    • 2019/2020: $3.48 million or 18.18%
    • 2020/2021: $1.69 million or 7.47%
    • 2021/2022: $1.58 million or 6.48%

    Public Advocates Office Position


    The Public Advocates Office reviewed the GOWC’s Application and supporting documents and recommends a decrease of no less than 4.05% in 2019/2020 (rates for 2020/21 and 2021/2022 are largely formulaic and based upon inflation at the time of filing).

    The following summarizes some of the Public Advocates Office’s major recommendations:

    Results of Operation

    The Commission should update GOWC’s RO Model with the current 8.15% Rate of Return (ROR) as agreed upon in the recently submitted settlement in the Cost of Capital proceeding A.18-05-001.

    Rate Design

    Under the Public Advocates Office tiered rate recommendation, a greater proportion of single-family residential and low-income customers will be billed at the lower Tier 2 consumption rates than under the rate design proposed by GOWC.

    Sales Reconciliation Mechanism

    The Commission should refrain from approving an additional alternative ratemaking mechanism that allows unnoticed rate increases to occur outside of general rate cases and decrease transparency.

    Operations and Maintenance Expenses
    The Commission should adopt TY 2019/2010 total O&M expenses of $10,466,189. This amount is $3,022,583 less than what GOWC proposes and better reflects historical trends and actual operations.

    Administrative and General Expenses
    The Commission should approve an Administrative and General expense total of $2,343,014 for TY 2019/2020. This amount is $182,759 less than what GOWC proposes and is a better estimate of reasonable increases in administrative costs and necessary ratemaking adjustments to account for transactions with affiliated companies.

    Payroll
    The Commission should adopt $2,591,447 in total payroll costs for TY 2019/2020. This amount is $133,724 less than what GOWC proposes and reflects more reasonable expectations of salary increases and necessary overtime.

    Utility Plant In Service
    The Commission should adopt GOWC’s proposed capital budgets but should order GOWC to:

    • Produce, in its next GRC, a detailed and comprehensive asset management plan that meets industry best practices.
    • Complete both its unfinished Emergency Response and Cross Connection Control Plans within ninety days of the final decision in this proceeding.
    • Achieve continuous disinfection of its entire system prior to the next GRC. In order to cover the additional expenses associated with this recommendation, the Commission should increase GOWC’s proposed expense budgets by $100,000 for Test Year 2019/2020 and Escalation Year 2020/2021.

    Income Taxes
    The Commission should deduct the 2018/2019 adopted California Corporate Franchise Tax (CCFT) amount in calculating Federal Income Taxes (FIT) amount for TY 2019/2020. This results in GOWC’s proposed revenue requirements being reduced by $49,593.

    Rate Base
    The Commission should order GOWC to:

    • Record an excess tax reserve amount of $496,617 as a regulatory liability that is deducted from Rate Base and refunded to ratepayers through annual amortization.
    • Refund $14,474 of excess tax reserves each year to ratepayers starting TY 2019/2020.
    • Record $82,416.75 in the Tax Cuts and Jobs Act Memorandum Account, refund the amount in the current GRC period and close the memo account.

    Balancing and Memorandum Accounts
    The Commission should:

    • Adopt the remaining balance net of excess usage surcharges at $815,651 and refund this balance to the ratepayers.
    • Close the Conservation Lost Revenue Memorandum Account since the drought emergency which was the justification for its creation is no longer applicable.

    See the Public Advocates Office's November 1, 2018 Testimony.

    See the Public Advocates Office's August 7, 2018 Protest to GOWC’s GRC Application.

    Proceeding Docket
    See the CPUC Proceeding docket.

    Visit the docket to subscribe to updates in this proceeding.
     

    Other Resources

    ARCHIVES

     2013 Great Oaks General Rate Case

     2016 Great Oaks General Rate Case