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Note Regarding References to ORA: Until September 2018, Public Advocates Office was previously known as ORA - Office of Ratepayer Advocates.

 

California American Water
Monterey District Rate Design:
Phase 1: Customer Water Allotment

 

Background

On July 14, 2015, Cal Am submitted its Application to the CPUC requesting to change their rate design, including modifications to their Conservation and Rationing Plan:  

  • Initiate a pilot program for annual consumption true-up, which would take the most recent, actual recorded consumption data for the Monterey District as the basis to update consumption forecasts and water rates. 
  • Modify conservation and rationing plans by consolidating the seven stages into four, allowing for quicker escalation of conservation measures to address supply constraints.  
  • Change rate design by no longer providing  individual customer allotments.

Currently, Cal Am's residential customers are billed based on a certain allotment of water, over a five-tiered rate system. Allotments are determined based on a customer survey of property and household size. 

Alleging abuse, Cal Am proposes to retire the allotment system and to treat all single-family residential customers in the same manner. At the same time it would compress rate tiers in order to decrease the disparity in per unit water rates between low- and high-volume water consumers. Additionally, Cal Am proposes to collect a greater portion of its revenues through fixed, meter charges to decrease revenue volatility and mitigate the likelihood of continuing uncollected revenues.     

 

Cal Am also proposes to change the way it recovers costs for the difference between forecasted and actual quantity revenues from the sale of water (known as WRAM -  the Water Revenue Adjustment Mechanism). 

  • Modify the current surcharge by basing it on a customer's meter size and recover costs based on consumption at all water usage tiers.  
  • Recover the current balance over a 20-year period with interest at its authorized cost of capital, currently 8.41%.    

Cal Am contends that the CPUC must realign rate design before Cal Am’s next rate case in 2017, in order to avoid continued under-collection of forecasted revenues.  Additionally, Cal Am asserts that the proposed changes are necessary to secure a modification to the Cease and Desist Order (CDO) issued by the State Water Resources Board, which would otherwise require water supplies from the Carmel River to be curtailed by more than 60%.  

 

Public Advocates Office Position 

The Public Advocates Office (the Office) performed an in-depth review of Cal Am's recommendation to change the way it assigns water allotments to customers. The Office supports the elimination of the outdoor lot allotment. In the summer months, the outdoor low allotment increases the amount of Tier 3 and Tier 4 water allocated to customers with larger lot sizes. While this recommendation does not change tariffed rates, by decreasing the amount of water certain customers can purchase at Tiers 3 and 4, it would increase the amount paid by customers who formerly had outdoor lot allotments and who do not reduce consumption.

See the Office's November 13, 2015 Testimony to Cal Am's Application to Modify Phase 1 Rate Design.

 

See the Office’s August 13, 2015 Protest to Cal Am’s Application.     

 

Proceeding Docket

See the CPUC's Proceeding Docket of the record of the case.  

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