BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Application of SAN JOSE ) WATER COMPANY (U W) for an Order ) authorizing it to increase rates charged for water ) service by $,,0 or.% in 01, ) Application No by $,1,00 or.0% in 00, and by ) (Filed January, 01) $0,1,00 or.1% in 01 ) Water Rates Advocates for Transparency, Equity, and Sustainability WRATES RESPONSE TO SJWC Opening Brief WRATES (Water Rate Advocates for Transparency, Equity, and Sustainability) by Patrick Kearns, MD W Central Ave, Los Gatos 00 Tel: 0- pjk@comcast.net September, 01 FAX: n/a 1 A.100 WRATES response to SJWC Opening Brief

2 TABLE OF CONTENTS I. SUMMARY OF ISSUES ADDRESSED BY WRATES IN RESPONSE TO SJWC Opening Brief, IV., pages -... II. INTRODUCTION... III. PROCEDURAL BACKGROUND... IV. DISCUSSION: ISSUES CONTESTED BETWEEN ORA AND SJWC... A. Memorandum account to follow costs of the FCV (flow control valves) pressure valve R&D Failed Project... V. CONCLUSIONS AND RECOMMENDATIONS.. A.100 WRATES response to SJWC Opening Brief

3 I. SUMMARY OF ISSUES ADDRESSED BY WRATES IN RESPONSE TO SJWC OR ORA POSITIONS: The following table summarizes WRATES' position on the differences addressed in WRATES' Opening Brief to those included in section SJWC Opening Brief, IV. A-D. This issue references the pertinent point in Commissioner Peterman's //01 Scoping Memorandum (SM-): Issue WRATES' Conclusion and Recommendations WRATES and ORA (Cal PA) disagree with San Jose Water Company (SJWC) that recovery of the Research, Development and Demonstration (RD&D) Pressure Reducing Valve Memorandum Account (PRVMA) should be charged to ratepayers. (SM #) The basis for the recommendation to deny recovery of costs from PRVMA to San Jose Water Company is SJWC s failure to administer the project prudently as specifically required by Resolution W-, Order, based on facts enumerated in the WRATES opening Brief and in the body and Appendix A of this response II. INTRODUCTION: Pursuant to Rule. of the California Public Utilities Commission ( Commission ) s Rules of Practice and Procedure ( Rules ) and pursuant to Commissioner Peterman's Scoping Memo issued June, 01, the Party to the proceeding, Water Rate Advocates for Transparency, Equity, and Sustainability (WRATES) submits this response to SJWC Opening Brief in this General Rate Case ( GRC ) in a timely manner. On February, 01, WRATES filed a Response to Application No followed by Final Response Testimony to the Application on May 1, 01. The response from WRATES was filed pursuant to Rule. (c) because WRATES does not object to the authority sought in the application, but believes we have information representing SJWC customers that would be useful to the Commission in acting upon it. This response to SJWC s brief gives information that ORA and SJWC did not include, but that WRATES is aware of, and that the Commission needs to consider assuring that ratepayers are fully represented in the final Decision. A.100 WRATES response to SJWC Opening Brief

4 III. PROCEDURAL BACKGROUND: SJWC s (01, 00, 01) GRC 01 Application was filed January, 01. WRATES responded factually on February, 01. A public participation hearing was held May 0, 01 in San Jose. On June, Commissioner Peterman issued a SCOPING MEMORANDUM AND RULING. Evidentiary hearings were held July and, 01. On July, the parties were verbally notified about a proposed settlement between SJWC and ORA. That notification confirmed that ORA and SJWC had reached a settlement in principle on issues with certain specified exceptions, and those details of the settlement would be filed August. At the request of the parties, the ALJ accepted a rescheduling to allow Briefs to be filed 0 days after the release of the Partial Settlement Agreement, on September, 01, concurrent with the date the comments on the Settlement were due. Chronology: GRC 00: SJWC includes a request to trial a PRV/FVC system at its own instigation. This specific request was denied by the CPUC while other application requests were approved. (Decision D.00). Advice Letter 1 is filed by SJWC on July, 0 again requesting approval for testing an electricity generating PRV/FVC. Three other water companies had filed AL with similar requests previously: AL 0-W filed on July, 0 by Golden State Water Company; AL- filed on July, 0 by California-American Water Company; and AL-1 filed on July, 0 by California Water Service Company. These filing dates are not consistent with testimony by Palle Jensen. 1 GRC 0: SJWC files an Advice Letter 1 requesting approval to initiate a FVC (hydro turbine) project on their initiative. DRA objects that this is an attempt to circumvent D.00, by recycling the PRV/FVC project into AL1. DRA recommends AL1 be denied. 1 The Commission did not find sufficient similarity between the PRV/FVC valve project rejected in GRC 00 with the July, 0 Advice Letter request. The AL 1 was approved in W- with the stipulation that the project be prudently administered as a condition to its orders. 1 SJWC and the three other water utilities who had filed independent Advice Letters worked hard by providing extensive responses to the DRA s objections to gain approval. The RD&D was approved. GRC 0: SJWC requests the Commission to close the PRVMA and rule that they could recover the costs in the account. ORA objected; the request was denied and the account was ordered to 1 RT 0:- (Jensen/SJWC). San Jose Water Company Advice Letter 1, July, 0. A.100 WRATES response to SJWC Opening Brief

5 remain open in spite of the project s inactivity. Resolution W- language included: the Commission orders that (SJWC) the Water Utilities shall, and energy utilities should, work with the Division of Water and Audits (DWA) Staff There is no mention that SJWC is working under the Water Division. The Commission goes on to order, Water Utilities shall provide the funds for the selected firm to work under the collaborative oversight of the DWA Staff. Shifting the responsibility for the imprudent administration, as previously detailed, should not exonerate SJWC for its collaborative contributions to imprudent administration. Their failure to properly research equipment s specification, evaluate equipment s lack of a working instillation, meet deadlines, request timely closure of the project, and apply for legitimate tax credits for an R&D project are all inconsistent with a prudent administration. (Appendix A.) IV. ISSUES CONTESTED BETWEEN WRATES ORA AND SJWC: A. (SM-) Memorandum account to follow costs of the FCV pressure valve R&D Failed Project WRATES maintains that CPUC should deny the recovery of costs in the PRVMA as recommended by the Office of Ratepayer Advocates but based on the failure of San Jose Water Company to administer the project prudently as specifically required by Resolution W-. Project administration was imprudent as detailed in WRATES Opening Brief, in spite of unsupported claims to the contrary in SJWC Opening Brief. SJWC raises an irrelevant and misleading argument that they were dependent and subservient to the Water Division with the implication that this exonerates their imprudent administration of the RD&D project. WRATES does not accept the claim that SJWC was compelled, requested, enticed or pressured to assume responsibility for administering the RD&D project. WRATES does not accept that this has relevance to the primary issue determining legitimate recovery of costs in the PRVMA. The only issue is determining the prudence of the administration of the project. Regardless, WRATES will address the record failing to support the insinuation that the Water Division. Final Resolution W- San Jose Water Co., California Water Service Co., California American Water Co. and Golden State Water Co. [Establish new and separate Memorandum accounts] Discussion, p, 1, p,, p0 #, p, Order #. Decision //0; Publ. /0/0. A100 SJWC opening Brief, IV THE COMMISSION SHOULD ALLOW SJWC TO RECOVER ITS RD&D PROJECT COSTS BECAUSE SJWC UNDERTOOK THE PROJECT AT THE WATER DIVISON S REQUEST, SJWC MET THE COMMISSION S STANDARD FOR RECOVERING SUCH COSTS, AND CAL PA APPLIES AN INAPPROPRIATE STANDARD IN OPPOSING COST RECOVERY. p. A.100 WRATES response to SJWC Opening Brief

6 should assume responsibility for the imprudent administration because the Water Division inappropriately pressured SJWC. Subsequently, WRATES will again address its assertion regarding the projects imprudently administered. SJWC contends that they undertook the RD&D project at the request of the Water Division. Neither the record nor SJWC offers corroboration of this claim, in spite of the numerous opportunities in testimony, cross-examination, SJW- and its opening Brief. The record does show that the SJWC Brief only uses Palle Jensen s testimony in a circular assertion as a reference supporting the claim (SJWC Opening Brief references,,, pp. -). The Water Division is a vague description without a credible interpretation of how, or by whom, the requests were made or pressure applied. No documentation is provided; no Water division authority or independent witness ratified the claim that pressure was placed or any of the four water utilities asked to take on an RD&D project using the Difgen PRV manufactured by Zeropex. V. Discussion On December, 0, the California Public Utilities Commission (CPUC) authorized this RD&D project in Resolution W- approving Advice Letter 1. The anticipated deliverable was a functioning electricity producing pressure-reducing "valve within to 1 months with prudent administration." The SJWC s project administration was imprudent due to disregard of this timeline, delayed recognition of the limitations and capabilities of the selected equipment and failure to file an Advice Letter seeking an extension or, more appropriately closure of the project on or soon after October, 0 as well as actions listed below (Appendix A). This date marks SJWC s stopping the bidding process for construction, as the project was not considered feasible or economically viable. This was essentially the end of the project. SJWC has submitted a request for recovery of costs without providing an explanation as to how these costs are reasonable. The unreasonable costs are identified in A.100 WRATES OPENING BRIEF.. Final Resolution W- pp 1-1,b. p 1, ; c. p #; d. p.. STANDARD PRACTICE FOR PROCESSING RATE OFFSETS AND ESTABLISHING AND AMORTIZING MEMORANDUM ACCOUNTS Standard Practice U--W. Revised April, 0. E. p A.100 WRATE OPENING BRIEF, p., line. A.100 WRATES response to SJWC Opening Brief

7 VI. Conclusion 1. SJWC failed to administer the RD&D in a prudent manner.. SJWC submitted itemized cost without detail, offering no explanations supporting the reasonableness of these costs. VII. Recommendations 1. The ALJ and commissioners should disregard any consideration of SJWC being owed recovery due to unsubstantiated claims that they were victims of undue influence from the Water Division.. In falling below a standard of prudent administration as detailed above and compared with results achieved by three other Class A Water Utilities for ratepayers, shareholders and the CPUC, SJWC should be denied recovery of costs listed in the PRVMA.. Close the PRVMA.. The CPUC should encourage SJWC to seek recovery through legitimate tax credits for their RD&D project. Dated September, 01, Respectfully submitted, in accordance with Rule 1. (b) of the California Public Utility Commission's Rules of Practice and Procedure California Code of Regulations Title 0, Division 1, Chapter 1 /s/ Patrick Kearns, MD Patrick Kearns, MD For: Water Rate Advocates for Transparency, Equity, and Sustainability W Central Ave Los Gatos, CA 00 Tel: 0- pjk@comcast.net A.100 WRATES response to SJWC Opening Brief