BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2838
                                                                  Page  1

          Date of Hearing:   April 24, 2002

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                 AB 2838 (Canciamilla) - As Amended:  April 1, 2002 

          Policy Committee:                              Water, Parks, and  
          Wildlife     Vote:                            18-0
                        Utilities and Commerce                15-0

          Urgency:     No                   State Mandated Local Program:   
          No     Reimbursable:               

           SUMMARY  

          This bill requires the Public Utilities Commission (PUC) to meet  
          certain timelines regarding water rate schedule filings.   
          Specifically, this bill: 

          1)Provides that a general water rate increase schedule shall  
            become effective as filed on an interim basis, but subject to  
            refund depending on the PUC's final decision: 

             a)   214 days following the date on which the application was  
               filed with the PUC or ,

             b)   40 days following the date that the schedule was filed  
               by way of an advice letter. 

          2)Provides that, if the PUC determines that the schedule is not  
            justified, it must notify the water corporation in writing  
            within: 

             a)   99 days from the date of filing of the schedule  
               application or, 

             b)   30 days from the date the schedule was filed by advice  
               letter.

          3)Requires the "not justified" notice from the PUC to indicate  
            all changes to the rate schedule that the PUC maintains are  
            required.  If the water corporation revises its schedule  
            within 10 days in accordance with the PUC's notice, the  
            re-filed rate schedule becomes final, and effective within 5  








                                                                  AB 2838
                                                                  Page  2

            days from the date of re-filing.

          4)Requires PUC to set a rate schedule it deems not justified for  
            hearing within a reasonable time.

           FISCAL EFFECT  

          Absorbable special fund costs to the PUC.  [Public Utilities  
          Reimbursement Account]

           COMMENTS  

           1)Background  .  In 1990, the PUC adopted a rate case plan (RCP)  
            for Class A water corporations (those with more than 10,000  
            service connections) to promote timely resolution of such  
            cases.  The RCP permits general rate case applications once  
            every three years, and allows minor rate increases to be filed  
            by way of advice letter.  The RCP schedule summary establishes  
            the time frame for the rate case process, from the filing of  
            the Notice of Intent to PUC final order.  The PUC's schedule  
            contemplates issuance of a final order within 214 to 259 days  
            after filing of the application, depending on the number of  
            districts included in the filing.  

           2)Purpose  .  Most water companies experienced significant  
            increases in electric costs in 2001.  Some water districts had  
            difficulty getting the PUC to accept offset rate increase  
            requests to recover these higher power costs.  This bill,  
            sponsored by the California Water Association, is intended to  
            create an incentive for the PUC to complete ratemaking cases  
            according to the timetables it has itself established.   
            Although a water company must assume some risk by charging its  
            proposed rate on an interim basis pending PUC approval, it  
            will enable the company to cover infrastructure and operating  
            costs when needed.  The author and sponsor maintain that the  
            PUC has often failed to adhere to its own deadlines and  
            practice rules.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081