“Different from Cal Am's residential customers, its business customers are well organized into groups like the Monterey County Association of Realtors and the Monterey County Hospitality Association. These commercial groups have made a pact with Cal Am: They would support its water-supply project if it would persuade the Public Utilities Commission to eliminate tiered rates based on usage for commercial customers. Both sides have kept their part of the bargain. Though good for them, it is far from good for Cal Am's unorganized residential customers, who are now substantially subsidizing commercial and other customers. That is what a graph in a filing by the Office of Ratepayer Advocates of the PUC (March 28, 2014, p. 2-22, pertaining to Application 13-07-002) clearly shows. The only recourse residential customers have is to support Measure O.”
“In doing so, they would be going against the mayors they elected. That is because the mayors have chosen to support their business constituents instead of their residential ones. The mayors are rightfully concerned about the economic well-being of their cities. So, politically, we residents are on our own, not only without political power behind us, but even with it against us. All the television ads and mailers featuring the mayors and financially supported by Cal Am amply testify to that.”
“The state would impose the fine on Cal Am, but Cal Am, following its customary practice, would seek authorization from the PUC to recover the cost of the fine from ratepayers. If Cal Am succeeded with the PUC, residential ratepayers would bear the brunt of the fine because, as shown in the ORA graph, we are substantially subsidizing other local water users. We could assure Cal Am would succeed with the PUC at our expense if we voted no on Measure O because then we would be voting in unison with the mayors and the business community in favor of Cal Am's project and so would deserve the fine when the project fails to meet the state deadline. To prevent Cal Am from recovering the cost of the fine from us, we residential ratepayers should vote yes on Measure O.”
The aforementioned graph entitled Figure 1-A: Revenue vs. Consumption shows residential customers subsidizing other water customer classes in Monterey based on 2012 Recorded %Revenue/%Consumption and 2015 Forecasted %Revenue/%Consumption. The OFFICE OF RATEPAYER ADVOCATES CALIFORNIA PUBLIC UTILITIES COMMISSION “ORA Analysis and Recommendations on OPERATING REVENUES, RATE DESIGN and SPECIAL REQUESTS: 5, 6, 8, 9, 21, 24, 25 of California American Water Company Application 13-07-002” PUBLIC VERSION, March 28, 2014 document is embedded. Information regarding 2012 Revenue/Consumption vs. 2015 Revenue/Consumption is reproduced from pages 2-20 and 2-21 and Figure 1-A: Revenue vs. Consumption page 2-22 is embedded.
OFFICE OF RATEPAYER ADVOCATES
CALIFORNIA PUBLIC UTILITIES COMMISSION
ORA Analysis and Recommendations on OPERATING
REVENUES, RATE DESIGN and
SPECIAL REQUESTS: 5, 6, 8, 9, 21, 24, 25 of California
American Water Company
Application 13-07-002
PUBLIC VERSION
San
Francisco, California
March
28, 2014
ORA concluded from this analysis that although Cal Am’s testimony states rates are designed so that the proportion of revenue from each class approximates the proportion of consumption in the class,121 the proportionality seems to be diverging, rather than converging, between present and proposed rate designs. In the majority of Districts, Residential customers will be contributing more revenue proportional to the quantity of water consumed.
The following chart shows the percentage of total revenues generated by the residential class in each District and how the percentage revenues is proportional to the percentage of total consumption by the residential class in each District in Year 2012 and Year 2015. As a general example, if a Residential customer class in a District generates 25% of the total revenue for that District and, as a class, consumes, 25% of the total consumption in that District, this is reflected in the table as 100%, or direct proportionality. From the chart, it is clear that a greater proportion of total revenues relative to total consumption will be collected from the residential customer class for all Districts in 2015. This also means that the Residential customers are subsidizing other water customer classes. A dramatic example of this is shown in the chart below is of the revenue versus consumption proportionality in Monterey in 2015, where clearly the Residential customers are responsible for a greater percentage of the total revenues not proportional to the amount of water they consume at 115%. This does not validate Cal Am’s testimony that rates are designed so that the proportion of revenue from each class approximates the proportion of consumption in the class.
Figure 1-A: Revenue vs. Consumption (2-22)
Source: OFFICE OF RATEPAYER ADVOCATES
CALIFORNIA PUBLIC UTILITIES COMMISSION
ORA Analysis and Recommendations on OPERATING
REVENUES, RATE DESIGN and SPECIAL REQUESTS: 5, 6, 8, 9, 21, 24, 25 of California
American Water Company Application 13-07-002
PUBLIC VERSION
San
Francisco, California
March
28, 2014
REFERENCES:
A1307002 – ProceedingFiled By: California-American Water Company
Filing Date: July 1, 2013
Category: Ratesetting
Current Status: ACTIVE
Description: Application of California-American Water Company (U210W) for Authorization to Increase its Revenues for Water Service by $18,473,900 or 9.55% in the year 2015, by $8,264,700 or 3.90% in the year 2016, and by $6,654,700 or 3.02% in the year 2017.
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