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