CC SR 20210907 F - Cal Water 2021 GRCCITY COUNCIL MEETING DATE: 09/07/2021
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA TITLE:
Consideration and possible action to participate as a party in the Cal Water 2021
California Public Utilities Commission General Rate Case.
RECOMMENDED COUNCIL ACTION:
(1)Authorize the City Manager, or designee, to serve as a party in a proceeding for
the California Water Service Company’s (Cal Water’s) General Rate Case with the
California Public Utilities Commission (CPUC);
(2)Direct Staff to serve and file a Motion for Party Status in the Application Proceeding
(Application 21-07-002);
(3)Authorize the Mayor to sign a letter to the CPUC offering McTaggart Hall at Hesse
Park as a public hearing location; and
(4)Direct Staff to publish information regarding the Cal Water ratemaking process on
the City website to update residents as the General Rate Case progresses.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: McKenzie Bright, Administrative Analyst
REVIEWED BY: Karina Bañales, Deputy City Manager
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A.Draft Motion for Party Status (page A-1)
B.Draft letter to the CPUC offering McTaggart Hall as a public hearing location
(page B-1)
C.Draft City of Rancho Palos Verdes Proposed Rate Calculator
D.Cal Water 2021 General Rate Case (filed July 1, 2021)
E.Palos Verdes Tariff Area 2021 proposed rates (Page E -1)
F.April 20, 2021 staff report reviewing Cal Water’s 2021 rate increase
G.June 1, 2021 staff report authorizing participation in Cal Water’s 2021 Cost
of Capital Application
H.Correspondence between the City and the CPUC regarding Cal Water rates
(page H-1)
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CITYOF RANCHO PALOS VERDES
BACKGROUND AND DISCUSSION:
Every three years, California Water Service (Cal Water) is required to submit an
Infrastructure Improvement Plan to the California Public Utilities Commission (CPUC),
including all rate changes, to ensure water rates accurately reflect the costs of providing
safe, reliable water service.1 In this General Rate Case (GRC) process, the CPUC sets
rates to cover the costs of providing service. Major costs to operate a water system
include but are not limited to capital projects, purchased electric power, purchased water,
labor, and chemicals.
Cal Water submitted its 2021 General Rate Case (GRC) application on July 1, 2021,
which, if approved, would affect all Cal Water ratepayers from 2023-2025. In its
application, Cal Water proposes to replace 27,000 feet of water main to prevent failure of
aging and high-risk pipelines; meter, control valve, tank and pump retrofits and
replacements to increase system reliability; system improvements related to wildfire
preparation to ensure that a reliable source of water and adequate fire protection is
consistently available; and safety upgrades at facilities to enhance security measures and
reduce vulnerability. According to Cal Water, the proposed rate increases are needed to
fund these improvements as well as routine costs.
If Cal Water’s proposal is approved by the CPUC as submitted, it is anticipated to increase
the average residential customer’s bill by approximately $2.64 or 2.5% per month. The
average residential customer in Rancho Palos Verdes has a 5/8” x 3/4" meter, using 15
CCF (one-hundred cubic feet), or 11,221 gallons of water per month.
The table below illustrates the proposed changes to service charges, assessed based on
the two most common residential meter sizes and quantity rates (tiers).
Table 1: Proposed Change in Cal Water Residential Rates in RPV2
Current Rate Proposed Rate Percent Change
Service Charge:
5/8” Meter $31.78 $39.42 24%
1” Meter $79.45 $98.56 24%
Quantity Rates ($/ccf):
Tier 1 (1-6 CCF) $4.9799 $1.6598 -67%
Tier 2 (7-17 CCF) $4.9799 $6.6380 33%
Tier 3 (18-25 CCF) $6.2276 $8.2974 33%
Tier 4 (25+ CCF) $9.3539 $12.4459 33%
1 In July 2020, Cal Water filed Advice Letter No. 2387 for the cost recovery of the Palos Verdes Peninsula
Water Reliability Project (project) and rates resulting from the project took effect on January 1, 2021. The
advice letter was the result of a 2018 GRC Settlement Agreement negotiated between Cal Water and the
Public Advocates Office where the parties agreed to remove the project cost from the 2018 GRC proceeding
and require that Cal Water file for recovery upon the project entering service (project entered service August
27, 2020) through an advice letter. This increase was the subject of the April 20, 2021 Council agenda item
(see Attachment F).
2 Actual rates may vary. The CPUC and the California Public Advocates Office (Cal Advocates) evaluate
proposals and may make recommended changes, a decision is expected in November 2022.
2
Water bills are a function of the service charge and quantity rates at each usage level –
a typical resident using 15 CCF will have their first 6 CCF charged at the Tier 1 quantity
rate and the remaining 9 CCF at the Tier 2 quantity rate. Therefore, regardless of total
usage, all residential customers benefit from the reduced Tier 1 (the first 6 CCF used).
On May 12, 2021, the City sent a letter to the CPUC, encouraging the reevaluation of the
cost structure to remove unfair burdens on both low-usage ratepayers and ratepayers
with large families that may be unfairly impacted by ultra-increased rates in response to
the 2018 GRC (see Attachment H). In the previous rate cycle, tiers had a variable increase
where Tier 1 increased by 5%, Tier 2 increased by 2 3%, and Tier 3 increased by 55%.
The City specifically requested a transition of the cost burden from service charges to tier
usage, expansion of water rate tiers, enhanced transparency regarding tier assignments,
and establishment of a tier reclassification process tied to a customer’s individual annual
water usage.
Cal Water’s proposed 2021 GRC incorporates some of these suggestions, and the
proposed changes address the need for adjustments for both low-usage and high-usage
users. Across all service areas, Cal Water has introduced a new low -usage tier with a
discounted unit rate for all residential customers, with the first 6 CCF of water usage per
month at a greatly reduced rate than previously existing tiers. The CPUC considers 6
CCF as essential for basic needs. Additionally, rather than a stepped increase at the
higher tier levels, such as the method approved in the 2018 GRC, quantity rates for Tiers
2-4 each increased by 33%, resulting in both a smaller increase for low-usage and high-
usage ratepayers than seen during the 2018 GRC.
Service Charges
Service charges are a factor of readiness-to-service, to the cost to essentially have the
water supply available for the moment the tap is turned on. The proportion of the service
charge, or the difference between meter sizes, is a direct correlation of the maximum
outflow capacity of the meter. This report focuses on 5/8” and 1” meters because they are
the most common residential meter. The service charge for a 1” meter is 2.5 times greater
than a 5/8” meter due to the greater maximum outflow capacity of the 1” meter.
The allocation of service charges for the various meter sizes are calculated based on the
CPUC’s Standard Practice Manual U-7-W3, which directs water utilities to spread the
service charge over the meter sizes in proportion to the maximum capabilities of the
meters themselves to handle flows. To provide background on the maximum outputs of
meters, a 5/8” meter has a maximum flow rate of 20 gallons of water per minute, and a
1” meter has a maximum flow rate of 50 gallons per minute. As a utility, Cal Water is
required to deliver up to the maximum capabilities of every meter in their system, whether
or not the tap is on. If a customer has a bigger meter, there is increased water flow, and
as a result, there are associated higher costs to handle and meet those higher demands.
Utilities must have appropriately sized water lines (or may need to upsize their water lines)
3 See CPUC Standard Practice Manual U-7-W; Rate Design for Water and Sewer System Utilities
Including Master Metered Facilities, pages 4-7
3
to accommodate customers’ demand and fire flow requirements to keep the water system
reliable and available 24 hours per day, 365 days per year. Part of the fixed costs
associated with this requirement are captured in the service charges.
The City’s proposed service charge increase of 24% is among the smallest increases
proposed in the 2021 GRC, across all Cal Water’s tariff regions.4 Service charges in
different tariff areas, even within the Cal Water system, can fluctuate greatly due to the
relative cost of the water. Rancho Palos Verdes does not have any groundwater reserves,
and all water is purchased and must be pumped uphill, making readiness-to-service
relatively more expensive compared to other tariff areas. Therefore, despite the minimal
increase, the Palos Verdes tariff area service charge remains among the most expensive,
following only the Dixon, Oroville, and Willows tariff areas.
Proposed Bill Changes
With the 2021 GRC as currently proposed, RPV ratepayers could see anywhere from a
20% decrease to a 33% increase in their monthly bill, depending on meter size and water
usage. The table below illustrates (for example purposes only) proposed bills for
ratepayers at three usage levels, holding water usage constant.
Table 2: Proposed RPV Bills, Based on Water Usage and Meter Size
Water Usage Meter Size Current
Monthly Bill
Proposed
Monthly Bill
Percent
Change
Low-usage (6 CCF) 5/8”x3/4” $61.66 $49.38 -19.92%
Low-usage (6 CCF) 1” $109.33 $108.52 -0.74%
Average (15 CCF) 5/8”x3/4” $106.48 $109.12 2.48%
Average (15 CCF) 1” $154.15 $168.26 9.16%
High-usage (30 CCF) 5/8”x3/4” $213.03 $251.01 17.83%
High-usage (30 CCF) 1” $260.70 $310.15 18.97%
Staff has prepared an interactive calculator for residents to input their current water usage
and see their estimated proposed bill change, based on the 2021 GRC proposed rates
(see Attachment C). This calculator will be updated as changes are made to the rate case
and once a decision is reached.
The Ratemaking Process
The six steps in the rate case process are as follows:
1. Cal Water reviews its historical costs, projected costs, and planned water system
improvements and prepares a GRC application for the consideration of the CPUC
staff.
2. The California Public Advocates Office (Cal Advocates) analyzes Cal Water’s
application and makes a recommendation. Cal Advocates usually recommend a
smaller increase than that requested by the utility.
4 The 24% increase in service charge is true for all meters in the Palos Verdes tariff area. Se e Attachment
E for proposed rates for all meter sizes.
4
3. The CPUC hosts Public Participation Hearings (PPH) to receive input from
customers on the application. Customers may also write to the CPUC.
4. The CPUC holds a formal hearing presided over by an Administrative Law Judge
(ALJ), which is similar to a court proceeding.
5. The ALJ issues a proposed decision.
6. The CPUC Commissioners vote on the proposed decision. New rates typically
become effective five days later. The entire process can take 18 months or more.
City Participation in the 2021 General Rate Case
Through its correspondence with Cal Water and the CPUC, the City has stated its intent
to file a motion to be a party in 2021 GRC and is currently a party in the 2021 Cost of
Capital Case (see Attachments F, G, and H). The City was informed that its concerns
regarding the 2018 GRC would be forwarded to the appropriate Commissioner’s office
and ALJ when the 2021 GRC was filed.
Participation in the 2021 GRC ensures the City has adequate notice and opportunity to
respond to issues, claims, and arguments that may be raised during the proceedings. The
City has a direct interest in protecting its constituents by ensuring the continuation of the
most cost-effective and deliverable water supply, and in ensuring the various components
of the overall water supply system on the Palos Verdes Peninsula are effective and
adequately reflect the public’s needs and wishes.
Public participation hearings are scheduled for September to November 2021. Testimony
will be served by Cal Advocates and other Parties through February, with Cal Water
expected to provide testimony in March 2022. Negotiations will continue through 2022,
with a decision expected to be authorized by the CPUC in November 2022 for rates
effective January 1, 2023.
Public Participation Hearing Locations
In preparation for this report, Staff met with Cal Water representatives who shared that
the CPUC hosts remote Public Participation Hearings (PPH). While the ultimate decision
of where to locate the hearing is up to the CPUC, Cal Water has requested that one of
the PPH be held in the Palos Verdes Peninsula, due to the high level of resident
engagement and recent Palos Verdes Peninsula Water Reliability Project. In conjunction
with this, Staff is recommending the City Council authorize the Mayor to sign a letter to
the CPUC offering McTaggart Hall at Hesse Park as a potential location for a public
hearing (see Attachment B).
ADDITIONAL INFORMATION:
On August 5, 2021, Cal Advocates, an independent organization within the CPUC that
advocates on behalf of utility ratepayers, filed a protest to Cal Water’s application. This
protest includes identifying issues that need further review, including whether proposed
rate increases are reasonable and justified, whether estimates of expenses are
reasonable, and whether the proposed rate designs are just and reasonable. In particular
5
to the Palos Verdes tariff area, Cal Advocates will review and analyze whether Cal Water
requests to open a memorandum account to track certain costs associated with the Palos
Verdes Peninsula Water Reliability Project that exceed the amount already authorized in
rates, including legal or other costs, is reasonable.
CONCLUSION:
As currently proposed, beginning on January 1, 2023, the average residential customer
using 15 CCF with a 5/8” x 3/4" meter in Rancho Palos Verdes will see their service
charge (which is one component of the bill) increase by 24%, with the overall bill seeing
a $2.64 or 2.5% per month increase.
While the City issued a formal protest to the rate increase proposed in the 2021 Cost of
Capital application, Staff recommends the City Council instead consider a motion for party
status with the GRC, as any protests will be covered by the one already issued by Cal
Advocates and the deadline for submitting a formal protest has passed.
In order to participate as an advocate for Rancho Palos Verdes ratepayers and to ensure
they are receiving and safe and reliable service at low costs, Staff recommends the City
Council authorize the City Manager, or designee, to become a party in the proceeding for
Cal Water’s 2021 GRC, to advocate on behalf of residents, and direct Staff to serve and
file a Motion for Party Status, as drafted or with revisions. Becoming a party ensures the
City receives all information provided during the ratemaking process, which can educate
and/or advocate for residents.
Staff recommends that the City Council authorize the Mayor to sign a letter, as drafted or
with revisions, offering Hesse Park as a location to host a public hearing in the course of
the 2021 GRC, to provide greater access for Rancho Palos Verdes customers to the
ratemaking process.
It is also recommended the City Council direct Staff to publish materials related to the
2021 GRC on the City website to help educate ratepayers about the process and
anticipated rate increases.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative action s are available for
the City Council’s consideration:
1. Do not seek party status for the GRC.
2. Identify revised language to add to the letter.
3. Do not authorize the Mayor to sign the letter offering McTaggart Hall as a public
hearing location.
4. Take other action, as deemed appropriate.
6
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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
MOTION FOR PARTY STATUS OF THE CITY OF RANCHO PALOS
VERDES
William Wynder
Aleshire & Wynder, LLP
1881 Von Karman Ave., Suite 1700
Irvine, CA 92612
Telephone: 310-527-6667
E-mail: wwynder@awattorneys.com
September 7, 2021 Attorneys for the City of Rancho Palos Verdes
In the Matter of the Application of California Water Service
Company (U-60-W), a California corporation, for an order
(1) authorizing it to increase rates for water service by
$80,484,801 or 11.1% in test year 2023, (2) authorizing it to
increase rates on January 1, 2024 by $43,582,644 or 5.4%
January 1, 2025 $43,197,258 or 5.1% in accordance with the
Rate Case Plan, and (3) adopting other related rulings and
relief necessary to implement the Commission’s ratemaking
policies.
Application 21-07-002
Filed July 1, 2021
A-1
2
MOTION FOR PARTY STATUS OF THE CITY OF RANCHO PALOS
VERDES
I. Introduction
The City of Rancho Palos Verdes (“City”), respectfully moves for party status in this
proceeding in accordance with Section 1.4 of the California Public Utilities Commission
(“Commission”) Rules of Practice and Procedure.
II. Interest in this Proceeding
The City of Rancho Palos Verdes is a general law city, located in Los Angeles County on
the Palos Verdes Peninsula, with water service for all residents and businesses within the City
provided by the California Water Service Company (“Applicant”).
A. The City requests party status in this proceeding to ensure the CPUC is informed of
the interests of the City, and all its citizens, that may be affected by this proceeding, and to
ensure the City has adequate notice and opportunity to respond to issues, claims and arguments
that may be raised by any party in the course of this proceeding.
B. The City has a direct interest in protecting its constituents by ensuring continuation of
the most cost-effective and deliverable water supplies. In addition, the City has a direct interest
in ensuring the various components of the overall water supply system on the Palos Verdes
Peninsula are effective and adequately reflect the public’s needs and wishes. To these ends, the
City promotes a full and balanced consideration of perspectives and a comprehensive analysis of
cost-effective service.
III. Notice
Service of notices, orders, and other correspondence in this proceeding should be directed
to the City at the address set forth below:
William Wynder, City Attorney Ara Mihranian
Aleshire & Wynder, LLP City Manager
1881 Von Karman Ave., Suite 1700 30940 Hawthorne Blvd.
Irvine, CA 92612 Rancho Palos Verdes, CA 90275
Tel: 310-527-6667 Tel: 310-544-5202
E-mail: wwynder@awattorneys.com E-mail: aram@rpvca.gov
A-2
3
IV. Conclusion
For the foregoing reasons and pursuant to Rules 1.4 and 11.1, Rancho Palos Verdes
respectfully requests that the CPUC grant this Motion for Party Status filing.
Dated: September 7, 2021 Respectfully submitted,
__ ___________________
William Wynder
Aleshire & Wynder, LLP
1881 Von Karman Ave., Suite 1700
Irvine, CA 92612
Attorneys for the City of Rancho Palos
Verdes
A-3
September 8, 2021 Via Email
The Honorable Marybel Batjer
C/O Terence Shia, Water Division Director
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102
SUBJECT: Proposition of Facilities for Public Participation Hearing of Cal Water
2021 General Rate Case (A. 21-07-002) in Rancho Palos Verdes
Dear President Batjer and Director Shia,
Following the recent filing of Cal Water’s 2021 General Rate Case (GRC) (A.21 -07-002),
the City of Rancho Palos Verdes would like to offer a facility to host a Public Participation
Hearing (PPH) on this case. McTaggart Hall at Hesse Park, located at 29301 Hawthorne
Boulevard, Rancho Palos Verdes serves as the City’s Council Chambers, can host up to
150 guests, and is equipped for teleconferencing over virtual platforms.
The City of Rancho Palos Verdes is located in the Cal Water’s Palos Verdes Tariff Area,
recently separated for the cost recovery of the Palos Verdes Peninsula Water Reliability
Project (as decided in D.20-12-007). The City has a high level of resident engagement
concerning water rates and hosting a PPH in the City will allow ratepayers in the Palos
Verdes region to directly engage in the public hearing process to help the CPUC reach
an informed decision on Cal Water’s proposed rate increase.
The City looks forward to working with the CPUC to host a PPH. Should you or your staff
require any further information regarding McTaggart Hall, or any other City facilities,
please contact City Manager Ara Mihranian at 310-544-5202 or aram@rpvca.gov.
Thank you for considering this request. We appreciate your considerable efforts to ensure
that ratepayers have access to safe, reliable, and affordable drinking water.
Sincerely,
Eric Alegria
Mayor, City of Rancho Palos Verdes
B-1
ERI C A LE GR IA, MAYOR
D AV ID D. BRADLEY, M AYOR PRO TEM
JOHN CRU ll<SHAN I<, COUNC ILMEMBER
l(E N DYDA, COUNC ILMEMBER
BARBARA FERRAR O, COUNC IL MEMBER
President Batjer and Director Shia
September 8, 2021
Page 2
cc: Public Advisor’s Office, via public.advisor@cpuc.ca.gov
Asia Powell, Local Government and Community Liaison, California Public Utilities
Commission
Rancho Palos Verdes City Council and City Manager
Angie Gilbride, Cal Water Regional Community Affairs
B-2
CALIFORNIA WATER SERVICE COMPANY
1720 North First Street
San Jose, CA 95112
(408) 367-8200
Revised Cal. P.U.C. Sheet No. XXXXX-W
Cancelling Cal. P.U.C. Sheet No. 12475-W
Schedule No. PV-LAR-1-R Page 1
Palos Verdes Tariff Area (Los Angeles County Region)
RESIDENTIAL METERED SERVICE
(Continued)
(To be inserted by utility) Issued By (To be inserted by CPUC)
Advice Letter 2021 GRC July
Filing
Greg A. Milleman Date Filed
Decision Vice President Effective Resolution
APPLICABILITY
Applicable to all metered water service provided to single-family residential customers. TERRITORY Palos Verdes Service Area:
Palos Verdes Estates, Rolling Hills, Rolling Hills Estates, Lomita, Rancho Palos Verdes,
and vicinity, Los Angeles County.
RATES 1 CCF is 100 cubic feet (748 gallons) Quantity Rates: For 1 - 6 CCF, per CCF $1.6598 For 7 to 17 CCF, per CCF $6.6380 For 18 to 25 CCF, per CCF $8.2974 For over 25 CCF, per CCF $12.4459 Service Charge: Per Meter Per Month
For 5/8 x 3/4 - inch meter$39.42For 3/4 - inch meter$59.14For Fire Sprinkler with 1 - inch meter$40.60For 1 - inch meter$98.56For 1-1/2 - inch meter$197.10For 2 - inch meter$315.36For 3 - inch meter$591.30For 4 - inch meter$985.50For 6 - inch meter$1,971.00
For 8 - inch meter$3,153.60
For 10 - inch meter$4,533.30
For 12 - inch meter$6,504.30
For 14 - inch meter$8,869.50
The service charge is a readiness-to-serve charge which is applicable to all metered service and
to which is added the charge for water used computed at the quantity rates. (C) (R)(C) (R)(C) (R)(N)(I) |
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E-1
CALIFORNIA WATER SERVICE COMPANY
1720 North First Street
San Jose, CA 95112
(408) 367-8200
Revised Cal. P.U.C. Sheet No. XXXXX-W
Cancelling Cal. P.U.C. Sheet No. 12474-W
Schedule No. PV-LAR-1-R Page 2
Palos Verdes Tariff Area (Los Angeles County Region)
RESIDENTIAL METERED SERVICE
(To be inserted by utility) Issued By (To be inserted by CPUC)
Advice Letter 2021 GRC July
Filing
Greg A. Milleman Date Filed
Decision Vice President Effective Resolution
SPECIAL CONDITIONS
1. Qualifying low-income individually metered residential customers are eligible for credits
as shown on Schedule CAP.2. All bills are subject to the following tariff schedules: Schedule UF (CPUC reimbursement
fee) and applicable surcharges and surcredits on Schedule RSF (Rate Support Fund),
Schedule CAP (Customer Assistance Program), and Schedule AS (Additional Surcharges
and Surcredits).3.Fire sprinkler rate: A single-family residence with a meter size that has a “fire sprinkler”
rate (listed above) is eligible for that rate if: (a) the customer is paying for service where
a residential fire sprinkler system is required/requested to be installed by local fire or
building codes; (b) a smaller meter would be large enough to provide adequate service
in the absence of the additional demand needed to supply water to the system; (c) the
sprinkler system is served through the meter providing residential water service; and (d)
the customer requests the “fire sprinkler” rate. The Company may seek verification that
the above criteria are met. This service will be considered a general metered service,
and not a fire service, so the rules and conditions for general metered service shallapply.(T) (T) 2021 GRC Application, Attachment F (Proposed Tariffs), Page 95
95 / 130 95 / 130
E-2
CALIFORNIA WATER SERVICE COMPANY
1720 North First Street
San Jose, CA 95112
(408) 367-8200
Revised Cal. P.U.C. Sheet No. XXXXX-W
Cancelling Cal. P.U.C. Sheet No. 12473-W
Schedule No. PV-LAR-1-NR Page 1
Palos Verdes Tariff Area (Los Angeles County Region)
NONRESIDENTIAL METERED SERVICE
(Continued)
(To be inserted by utility) Issued By (To be inserted by CPUC)
Advice Letter 2021 GRC July
Filing
Greg A. Milleman Date Filed
Decision Vice President Effective Resolution
APPLICABILITY
Applicable to all metered water service except that provided to single-family residential
customers. TERRITORY Palos Verdes Service Area:
Palos Verdes Estates, Rolling Hills, Rolling Hills Estates, Lomita, Rancho Palos Verdes,
and vicinity, Los Angeles County.
RATES 1 CCF is 100 cubic feet (748 gallons) Quantity Rates: Per CCF $7.3047 Service Charge: Per Meter Per Month
For 5/8 x 3/4 - inch meter$34.57For 3/4 - inch meter$51.86For 1 - inch meter$86.43For 1-1/2 - inch meter$172.85For 2 - inch meter$276.56For 3 - inch meter$518.55For 4 - inch meter$864.25For 6 - inch meter$1,728.50
For 8 - inch meter$2,765.60
For 10 - inch meter$3,975.55
For 12 - inch meter$5,704.05
For 14 - inch meter$7,778.25
The service charge is a readiness-to-serve charge which is applicable to all metered service and
to which is added the charge for water used computed at the quantity rates.
SPECIAL CONDITIONS
1. All bills are subject to the following tariff schedules: Schedule UF (CPUC reimbursement
fee) and applicable surcharges and surcredits on Schedule RSF (Rate Support Fund),
Schedule CAP (Customer Assistance Program), and Schedule AS (Additional Surcharges
and Surcredits).
2. Qualifying non-profit group living facilities, agricultural employee housing facilities, and
migrant farm worker housing centers are eligible for credits as shown on Schedule CAP.(R) (I) |
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E-3
May 12, 2021 Via Email
The Honorable Marybel Batjer and Commissioners
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102
Elizabeth Echols, Director
Public Advocates Office
505 Van Ness Avenue
San Francisco, CA 94102
SUBJECT: Rancho Palos Verdes Concerns Over Cal Water Rates for Residential
Ratepayers
Dear President Batjer, CPUC Commissioners, and Director Echols,
On behalf of the residents and City Council of the City of Rancho Palos Verdes, I am
writing to express our concerns over the recent substantial increase in service charges
for residential ratepayers imposed by the California Water Service Company (Cal
Water) in the Palos Verdes service area of the Rancho Dominguez District.
On December 3, 2020, the California Public Utilities Commission (CPUC) approved Cal
Water’s General Rate Case for 2020-2022, and residents began seeing the related
increases to their water bills during the February billing cycle.
The approved rate increase incorporated the fees associated with Cal Water’s recently
completed $96 million Palos Verdes Peninsula Water Reliability Project. This project
added seven miles of new drinking water pipeline for customers on the Palos Verdes
Peninsula and added a new pump station. As a result, customers’ service charges
increased by 50%, and tier usage rates increased by 5% for Tier 1, 23% for Tier 2, and
55% for Tier 3.
While the City appreciates the work by the CPUC and the Public Advocates Office (Cal
PA) to review, analyze, and approve the recent Cal Water General Rate Case, we are
concerned that the substantial increase in service charges unfairly penalizes customers
for the readiness-to-service charge. Of particular concern to residents is the significant
service charge associated with a 1” meter. Residents in Rancho Palos Verdes most
likely did not have a choice in their meter size and may not have considered the
H-1
CITY OF RANCHO PALOS VERDES
President Batjer, CPUC Commissioners, and Director Echols
May 13, 2021
Page 2
financial implications of having a larger meter. We would therefore like to formally
express our concerns over the substantial increase in water bill rates, on behalf of
Rancho Palos Verdes ratepayers.
The City recognizes that the rate setting process has ended, and that Cal Water
anticipates starting its 2023-2025 General Rate Case in the summer. The City
anticipates participating in this process as an intervenor to better protect the interests of
Rancho Palos Verdes ratepayers.
We understand that many considerations go into approving new rates for private utility
companies, and appreciate the time, effort, and advocacy that occurred as part of the
2020-2022 General Rate Case. As the new cycle begins for Cal Water, we encourage
the CPUC and Cal PA to reevaluate how costs like the Palos Verdes Water Reliability
Project are borne by residential ratepayers.
To that effect, for the next rate increase hearings, we propose the following
recommendations aimed at alleviating the significant rate increase associated with the
completion of the Palos Verdes Peninsula Water Reliability Project for residential
ratepayers:
• Transition of cost burden from service charges to tier usage. Transitioning some
of the service charge cost to the tier usage may help encourage conservation
and minimize financial penalties to residents with a 1” meter.
• Expansion of water rate tiers – increasing the number of tiers from three to five
for single-family residential customers may provide a more equitable distribution
of recovery costs for the Palos Verdes Peninsula Water Reliability Project based
on a ratepayer’s water usage.
• Enhanced transparency regarding tier assignments and establishment of a tier
reclassification process that is tied to a customer's individual annual water usage.
Thank you for your continued efforts to ensure Californians’ access to safe and reliable
utility infrastructure and services at low ratepayer costs. We understand that the
recently approved Cal Water General Rate Case underwent a rigorous review process,
but we, on behalf of Rancho Palos Verdes ratepayers, believe there may be other rate
options available to distribute the costs of the Palos Verdes Water Reliability Project
more equitably across ratepayers, while promoting conservation efforts.
The City looks forward to being an intervenor and active participant in the next Cal
Water General Rate Case cycle, to ensure that Rancho Palos Verdes residents have
safe, reliable, and low-cost water.
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President Batjer, CPUC Commissioners, and Director Echols
May 13, 2021
Page 3
Sincerely,
Eric Alegria
Mayor, City of Rancho Palos Verdes
cc: Rancho Palos Verdes City Council
Ara Mihranian, City Manager
Karina Bañales, Deputy City Manager
Angie Gilbride, Cal Water Regional Community Affairs
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300 CAPITOL MALL, 5TH FLOOR • SACRAMENTO, CALIFORNIA 95814
505 VAN NESS AVENUE •SAN FRANCISCO, CALIFORNIA 94102
June 14, 2021
Mayor Eric Alegria
City of Rancho Palos Verdes
30940 Hawthorne Blvd.
Rancho Palos Verdes, CA 90275
RE: Response to May 12, 2021 Letter regarding Residential Rates in Cal Water’s
Palos Verdes District
Dear Mayor Alegria and the City of Rancho Palos Verdes,
Thank you for your May 12 letter which raises concerns regarding California
Water Service Company’s (Cal Water) rate increase in the Palos Verdes District
associated with Cal Water’s previously approved General Rate Case (GRC) and
the associated Palos Verdes Peninsula Water Reliability Project (PVPWRP). Your
concerns address the increase in service charges adopted in rates and the rate
increase implemented as a result of including the costs for the PVPWRP in rates.
As you are aware, the changes in rates reflect the adopted rate design
authorized in December by Decision (D.) 20-12-007 in Cal Water’s previously
approved GRC proceeding. Also included in this rate increase are the rate
impacts of the PVPWRP, which added $96 million in capital costs. Both of these
rate impacts were made effective in rates in February 2021.
Additional factors in D.20-12-007 impacting rates include adjustments in the
revenue allocation between the service charges and quantity rates and the
break points between residential quantity rate tiers. For revenue allocation, Cal
Water initially requested to shift the ratio for all its districts to a 40% service
charge and a 60% quantity rate revenue allocation in order to better recover
the higher fixed costs versus variable costs of providing water service and to
provide increased revenue stability. The Public Advocates Office stated their
concerns that the significant increase in service charges could lead to greater
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MARYBEL BATJER
PRESIDENT
PUBLIC UTILITIES COMMISSION
STATE OF CALIFORNIA
TEL : (916) 823-4 8 4 0
WWW .CPUC .CA .GOV
Mayor Eric Alegria
June 14, 2021
Page 2
water usage and less conservation. Ultimately, a settlement was reached
between the two parties, and for the Palos Verdes District, the ratio changed
from a 22% service charge and 78% quantity rate to a 25% service charge and
75% quantity rate revenue allocation. This was one of the contributing factors in
the increases applied to service charge rates, but this outcome from the
settlement is significantly lower than what Cal Water requested.
Regarding the residential tier breakdowns adopted in D.20-12-007, Cal Water
updated their rate design model that was originally adopted in D.08-02-036 1
and uses more recent sales data. The updated model assigns Tier 1 quantity
rate usage as representing between zero and average winter residential usage,
Tier 2 as covering between the top of Tier 1 and average summer residential
usage, and Tier 3 covering all usage above Tier 2. The Tier 1 quantity rate was
set as the baseline rate with the rate of Tier 2 being 1.25 times Tier 1 and Tier 3 as
1.5 times Tier 2 in order to recover the 75% quantity rate revenue allocation
adopted in the settlement for D.20-12-007. This change in tier breakdowns from
D.08-02-036 to D.20-12-007 largely contributed to the escalating rate increases
between tiers.
While the rate increases attributable to the PVPWRP are also significant, the
project addresses the need for an additional source of water and increased
water resiliency. The installation of a second pipeline and pump station on a
separate electrical grid from the existing water infrastructure enhances the
reliability of Cal Water delivering drinking water to the residents and businesses
on the Palos Verdes Peninsula.
I hope these details help in explaining the rate increase in the Palos Verdes
District adopted in D.20-12-007 and appreciate your understanding of the GRC
process. We look forward to the City of Rancho Palos Verdes actively becoming
a party in Cal Water’s next GRC, which should be filed in July 2021 for rates
effective January 1, 2023. The City’s participation in this proceeding as an
intervenor would best provide the City an opportunity to represent Rancho Palos
Verdes ratepayers. Your letter along with the recommendations you provided
will be forwarded to the appropriate Commissioner’s office and Administrative
Law Judge once they are assigned to the new GRC and may be considered
when developing the scope of the proceeding. The Commission recognizes the
1 Tier 1 quantity rate usages were based on average residential indoor usages with the quantity rates
approximately 5% less than Tier 2. Tier 2 quantity rate usages were based on summer residential averages and
were set as the baseline rates. Tier 3 quantity rates were approximately 1.2 times Tier 2.
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Mayor Eric Alegria
June 14, 2021
Page 3
importance of listening to and considering different perspectives to ensure
ratepayers have access to safe, reliable, and affordable drinking water.
Thank you again for your letter. Should there be any further questions or
concerns please contact the Water Division Director, Terence Shia, at
Terence.Shia@cpuc.ca.gov or (415) 703-2213.
Sincerely,
Marybel Batjer, President
California Public Utilities Commission
CC: Amy Yip-Kikugawa, Acting Director, Public Advocates Office
Terence Shia, Director, Water Division
Rancho Palos Verdes City Council
Ara Mihranian, City Manager
Karina Bañales, Deputy City Manager
Angie Gilbride, Cal Water Regional Community Affairs
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June 29, 2021 Via Email
The Honorable Marybel Batjer
C/O Terence Shia, Water Division Director
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102
SUBJECT: Response to June 14, 2021 Letter Regarding Residential Rates in Cal
Water’s Palos Verdes District
Dear President Batjer and Director Shia,
Thank you for your June 14 letter responding to our concerns regarding California Water
Service Company’s (Cal Water) rate increase in the Palos Verdes District associated with
Cal Water’s previously approved General Rate Case (GRC). We appreciate the additional
background you provided on the reasoning behind the ratemaking process.
While we are looking forward to participating as an intervenor in the next GRC, we are
still concerned regarding the unfair distribution of service charge between 5/8” and 1”
residential meters. We recognize that the service charge is a factor of readiness-to-
service, and that larger meters use additional water, which requires additional
infrastructure and is the reason for the cost differential. However, a service charge that is
2.5 times greater for a 1” meter compared to a 5/8” meter seems unfair, particularly since
actual increased water usage is already captured in the quantity rate fees.
This concern is not solely directed at Decision (D.) 20-12-007, as the service charge for
a 1” meter maintained the 2.5 factor service charge from a 5/8” meter since at least the
previous GRC; this is a concern with the methodology of the allocation of service charges.
The table below illustrates the differences between the service charges for the current
rates as approved in the GRC D. 20-12-007, as well as the previous GRC D. 16-12-042.
Palos Verdes Service Charge per Meter Size
Meter Size D. 16-12-042
Service Charge
D. 20-12-007
Service Charge
Percent Change
(D.16 to D.20)
5/8” Meter $21.17 $31.78 50%
1” Meter $52.93 $79.45 50%
Multiplier 2.5 2.5
A residential customer with a 1” meter under the current rates pays nearly $50 more per
month than a customer with a 5/8” meter, all else equal. We would ask that the service
charge levels be re-evaluated so that there is less of a difference between the 5/8” and
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CITY OF RANCHO PALOS VERDES
President Batjer and Director Shia
June 29, 2021
Page 2
1” meters during future GRC cycles: to allow quantity charges to cover the additional
readiness-to-service capacity required for larger meters.
Thank you for considering our letters and recommend ations, and for forwarding them to
the new GRC to be considered in the next proceeding. We appreciate your considerable
efforts to ensure that ratepayers have access to safe, reliable, and affordable drinking
water.
Sincerely,
Eric Alegria
Mayor, City of Rancho Palos Verdes
cc: Amy Yip-Kikugawa, Acting Director, Public Advocates Office
Asia Powell, Local Government and Community Liaison, California Public Utilities
Commission
Rancho Palos Verdes City Council
Ara Mihranian, City Manager
Karina Bañales, Deputy City Manager
Angie Gilbride, Cal Water Regional Community Affairs
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