Valencia Water Company
2014 General Rate Case (GRC) and Cost of Capital
In January 2013 Valencia Water filed its Application
with the CPUC requesting approval to:
- Increase rates from 2014 – 2016:
- 2014: 15.97% increase
- 2015: 2.93% increase
- 2016: 4.23% increase
- Significantly increase costs through Payroll, Outside Services, State and
Federal taxes, and Conservation expense.
Valencia simultaneously filed an Application
to establish its authorized Cost of Capital for the same period, which sets the
rates at which Valencia can earn a profit. Valencia and DRA proposed a
stipulation that would reduce Valencia’s authorized rate of return from the
8.28% to 7.20%, potentially saving Valencia ratepayers over $400,000 annually.
In December 2012 Castaic Lake Water Agency (CLWA), a
public water wholesaler, acquired all of Valencia Water Company’s stock via an
Domain Settlement Agreement that resolved a previous CLWA action to acquire
Valencia Water through eminent domain. Valencia did not submit an official
request to the CPUC for approval to transfer ownership of the company as
required by Public
Utility Code 851, which could void the transaction. The CPUC has ordered
Valencia and CLWA to file an 851 Application by Feb 14, 2013, which will address
the transfer of control of the utility from the currently authorized owners to
the Castaic Lake Water Agency.
Subsequently, the Santa Clarita Organization
for Planning The Environment and Friends of The Santa Clarita River filed a Complaint
Case with the CPUC to investigate CLWA’s acquisition of Valencia, which
according to the Complaint violates numerous sections of the California Public
A public hearing was held in Valencia on May 16,
DRA Policy Position
DRA recommends that the CPUC should consolidate
Valencia’s GRC and Cost of Capital cases in order to allow related issues to
be reviewed and heard for consistency and streamlining in CPUC procedural
forums. DRA also urges the CPUC to open an Investigation to address concerns
raised in the Complaint Case regarding the acquisition of Valencia.
DRA will address the specific merits of
Valencia’s GRC requests after completing its discovery and analysis and
serving its Testimony, anticipated in the 2nd quarter of 2013.
See DRA’s February 6, 2013 Protest.
The Proceeding docket for Valencia’s GRC.
The Proceeding docket for Valencia’s Cost
Proceeding schedules will be set after the GRC
Pre-Hearing Conference, which has yet to be scheduled.
Testimony is expected to be served by parties in
the GRC in the 2nd quarter of 2013.