Apple Valley Ranchos Water Company
2015 General Rate Case
January 2, 2014 Apple Valley Ranchos Water Company filed a general rate case Application proposing
to increase its customer rates over present levels for 2015 – 2017:
$3.1 million (or 14.88%) increase
$2.1 million (8.48%) increase
$2.2 million (8.19%) increase
$7.4 million increase over 3 years
Valley's request to increase its revenues would increase the average residential
customer water bill by about $18 every two months.
CPUC held a Public Participation Hearing in the Apple Valley Ranchos
service territory on April 30, 2014.
CPUC held Evidentiary Hearings at its San Francisco office June 16 -
August 8, 2014, ORA and Apple Valley filed a partial Settlement
Agreement requesting CPUC
$2.8 million (or 13.53%) increase
$1.4 million (5.8%) increase
$1.5 million (6.0%) increase
$5.7 million increase over 3 years
for 2016 and 2017 are estimates and will vary based on the level of inflation at
the time when AVR submits its attrition filings.
CPUC Interim Decision
May 2015, the CPUC issued an Interim Decision rejecting
the Partial Settlement Agreement.
Interim Decision also implements an interim rate increase, subject to refund in
the Final Decision:
2015: $2.4 million increase (or 11.56%)
Impact for Average Residential Customer: Approximately 10%
increase (e.g., $6.44 per month on average monthly bill of $65)
Interim Decision orders settling parties to submit revised
consumption estimates to reflect the Governor’s Executive Order. On June
30, 2015, Apple Valley submitted its Amended
Supplemental Testimony with revised consumption estimates that comply
with the Governor’s Executive Order.
Amended Settlement Agreement
May 11, 2015, Apple Valley and ORA submitted an Amended
Settlement that revised the capital expenditures for the main replacement
from $5.3 million to $4.1 million for 2015.
September 1, 2015, a CPUC email Ruling directed Apple Valley and ORA to
submit a Final Amended Settlement Agreement that compares the difference in
consumption estimates between its two Settlement proposals.
ORA’s Policy Position
supports the May 11 Amended Settlement Agreement because it would
fairly reduce Apple Valley’s original requested rate increase, but still
allows it to continue to provide safe and clean water service in an efficient
and cost-effective manner. Additionally, the Amended Settlement further
reduced capital expenditures for main replacement from $5.3 million to $4.1
million for 2015.
litigated the unresolved issues with Apple Valley in the best interest
of customers. While ORA supports Apple Valley’s ongoing conservation
efforts in furtherance of the state’s goals, ORA found that these goals could
be achieved at lower cost estimates. ORA recommended that Apple Valley’s
conservation expenses should continue to be tracked and subject to refund.
Additionally, ORA recommended that the CPUC should deny Apple Valley’s request
Solar Project Memo Account because the project is open-ended and undefined.
of ~$25,000 in under-collected revenue requirement in its Office Remodel
Balancing Account because project has not been constructed and completed,
and Apple Valley is now pursuing a totally different project.
proposed level payment plan option because Apple Valley failed to provide
any detailed information about the mechanics of the plan or the costs
associated with the plan.
of a Sales Reconciliation Mechanism because it erodes the cost of service
processes established by the Rate Case Plan, and threatens the effectiveness
and integrity of the regulatory process.
costs for gravity irrigation in the WRAM because conservation has not been
observed in the water use trends related to gravity irrigation, and there is
no specific plan for encouraging this user to conserve water.
chemical costs in the WRAM because these costs are under Apple Valley’s
control as a normal operating expense that should not be granted balancing
Brief on the litigated issues.
detailed analysis found that Apple Valley's request should be decreased due
to over-estimates in operational and administrative costs, infrastructure, and forecasted water
sales. ORA recommended customer rates should be adjusted as follows over present
$1.6 million (or 7.97%) increase
$ $663,682 (or 2.99%) increase
- 2017: To
be determined by inflation factors at this time, and the difference
between rate base in between 2015 and 2016.
recommendation would increase an average residential water bill $9.27 every two
key recommendations include:
• Water Sales Forecast:
Lower AVR's estimates for water sales and lower unaccounted for
water percentage. (Testimony, Chapter 2).
• Operations & Maintenance and Administrative & General Expenses:
Lower leased water rights expenses, conservation expenses, and
regulatory expenses. (Testimony, Chapter 3).
• Pensions and Benefits Expenses:
Lower AVR's estimates. (See Chapter 5).
• Plant Investment and Rate Base:
Disallow and/or reduce various AVR infrastructure
addition estimates for 2014, 2015, and 2016 by 55%, 29%,
and 27% respectively. (See Chapter 8).
Additionally, the CPUC should require AVR to:
with CPUC order to issue a detailed study to justify its compensation packages
at all levels.
its pilot conservation rate design program and the CPUC should
adopt AVR's proposed modifications to the tier structure.
ORA's May 19, 2014 Amended Testimony.
ORA's April 27, 2015 Comments
on the CPUC Proposed Decision.
ORA’s February 10, 2014 Protest.
the Proceeding docket.
AVR General Rate Case Archive