BILL ANALYSIS
AB 2838
Page 1
Date of Hearing: April 9, 2002
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Joseph E. Canciamilla, Chair
AB 2838 (Canciamilla) - As Amended: April 1, 2002
SUBJECT : Water rates.
SUMMARY : Requires the Public Utilities Commission (PUC) to
follow certain procedures when a water corporation files a
schedule stating rates, classifications, contracts, practices or
rules for the service of water. Specifically, this bill :
1)Makes various findings including that the PUC needs to act
timely in making determinations and establishing rates for
water service so that water corporations can meet their
obligations to provide their ratepayers with safe, secure, and
reliable water service.
2)Requires that whenever a water corporation files a schedule
pursuant to the PUC's rate case plan (RCP) for general rate
increase applications or pursuant to an advice letter, that:
a) Except as otherwise provided, the general rate increase
schedule, as filed, shall become effective on an interim
basis, subject to refund, 214 days following the date the
application was filed for, or 40 days following the filing
of the schedule pursuant to an advice letter. If the PUC
final decision revises the rates downward the amount
collected over the approved rate increase would be refunded
to the ratepayer.
b) If the PUC determines that the schedule is not
justified, it shall notify the water corporation of the
determination in writing 99 days from the date of filing of
the schedule application and 30 days from the date of
filing of the schedule pursuant to an advice letter.
c) The PUC notice that the schedule is not justified shall
state all changes to the schedule that are required in the
opinion of the PUC.
d) If the water corporation files a revised schedule
incorporating all the changes specified within 10 days of
receipt of the PUC notice, the revised schedule becomes
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effective, on an interim basis, not subject to refund,
after five days from the date of the re-filing.
e) If the PUC notifies the water corporation that it has
determined that schedule is not justified, the PUC shall
set the matter for a hearing to be held within a reasonable
time from the date of the notice.
f) The revised schedule becomes final upon PUC action
approving the revised schedule or otherwise as the PUC
finds to be justifiable.
EXISTING LAW : Provides that all hearings, investigations, and
proceeding shall be governed by the Public Utilities Code and by
rules of practice and procedure adopted by the PUC.
FISCAL EFFECT : Unknown.
COMMENTS :
Existing law requires the PUC to act on a proposed decision in a
rate-making proceeding within 60 days of the proposed decision's
issuance, unless an alternate decision is put forward, or unless
"extraordinary circumstances" prevent the PUC from acting. The
California Water Association, the bills sponsor, states that as
there is not a consequence to the PUC if it fails to act timely
and that the 60-day timeline is routinely ignored.
The PUC adopted a RCP for Class A water corporations in 1990.
Class A water corporations are those with more than 10,000
service connections. The adoption of the RCP was intended to
promote timely processing of such cases. The RCP provides for,
among other things, the acceptance of Class A water corporation
general rate case applications once every three years. In order
to stagger the workload some water corporations file rate cases
in January and some file in July. The RCP schedule summary
establishes the time frame for the rate case process from the
filing of the Notice of Intent to the PUC's final order. The
PUC schedule summary provides for the issuance of a final order
within 214 -259 days of the filing of the application depending
on the number of districts included in the filing. There are
several Class A water corporations that provide service in
districts which are dispersed throughout the state. Class A
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water corporations may also file, during the three-year time
frame, for a rate increase that is minor in nature in the form
of an advice letter.
The author states that while both existing law and the RCP
establish timelines for the PUC to complete ratemaking cases,
the PUC in recent years has often failed to meet these
deadlines. This bill will resolve the problem by providing an
incentive for the parties to work together early in the process
and resolve all issues before formal hearings begin. The longer
the PUC takes to complete a rate-making case the more costly it
becomes for the water corporation, particularly if significant
investments in infrastructure have been made. For example, the
California Water Service Company sustained a $1,000,000 loss due
to a three-month delay by the PUC in 2000.
Should this bill pass out of this committee, it will be referred
to the Utilities and Commerce Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Water Association (sponsor)
Opposition
None on File
Analysis Prepared by : Kathy Mannion / W., P. & W. / (916)
319-2096