General Office Plant and Expense
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BOOK 2 TESTIMONY IN REBUTTAL TO DRA REPORT ON PLANT GENERAL RATE CASE TEST YEAR 2014 APPLICATION 12-07-0017 APRIL 30, 2013 TABLE OF CONTENTS CHAPTER 1: INTRODUCTION & SUMMARY ............................................................................. 1 1.1. INTRODUCTION ................................................................................................................ 1 CHAPTER 2: COST ALLOCATIONS ............................................................................................ 2 2.1. Introduction ......................................................................................................................... 2 2.2. Allocation of General Office Expense and Rate Base to Districts ...................................... 2 CHAPTER 3: PAYROLL EXPENSE, PAYROLL TAXES, AND BUSINESS LICENSE TAX EXPENSE ..................................................................................................................................... 4 3.1. Introduction ......................................................................................................................... 4 3.2. General Office Payroll Expense ......................................................................................... 4 3.3. Dominguez District Merger Synergies .............................................................................. 23 3.4. General Office Payroll Tax Expense ................................................................................ 23 3.5. Business License Tax Expense ....................................................................................... 24 CHAPTER 4: OPERATIONS AND MAINTENANCE EXPENSE................................................. 24 4.1. Introduction ....................................................................................................................... 24 4.2. Payroll .............................................................................................................................. 24 4.3. Transportation .................................................................................................................. 24 4.4. Source of Supply .............................................................................................................. 25 4.5. Pumping ........................................................................................................................... 25 4.6. Water Treatment .............................................................................................................. 25 4.7. Transmission and Distribution .......................................................................................... 26 4.8. Customer Accounting ....................................................................................................... 26 4.9. Conservation .................................................................................................................... 28 4.10. Maintenance Stores ....................................................................................................... 28 4.11. Purchased Services ....................................................................................................... 28 CHAPTER 5: ADMINISTRATIVE AND GENERAL EXPENSES ................................................ 30 1 5.1. Transportation .................................................................................................................. 30 5.2. A&G Payroll ...................................................................................................................... 30 5.3. Office Supplies ................................................................................................................. 30 5.4. Property Insurance ........................................................................................................... 31 5.5. Injuries and Damages ...................................................................................................... 32 5.6. Pension and Benefits ....................................................................................................... 32 5.7. Franchise Requirements .................................................................................................. 32 5.8. Regulatory Commission Expense .................................................................................... 32 5.9. Outside Services .............................................................................................................. 35 5.10. Miscellaneous General Expenses .................................................................................. 37 5.11. Maintenance of General Plant ........................................................................................ 37 5.12. Rent ................................................................................................................................ 38 5.13. Administrative Charges .................................................................................................. 38 5.14. Amortization of Limited Term Investments ..................................................................... 39 5.15. Dues and Donations ....................................................................................................... 39 CHAPTER 6: GENERAL OFFICE PLANT ADDITIONS ............................................................. 40 6.1 INTRODUCTION ............................................................................................................... 40 6.2 Advance Capital Budget Specific Projects ........................................................................ 40 6.3 Carryover Projects ............................................................................................................. 60 6.4 Attachments ...................................................................................................................... 67 2 1 CHAPTER 1: INTRODUCTION & SUMMARY 2 1.1. INTRODUCTION 3 This is the California Water Service Company’s (Cal Water) Rebuttal Testimony to the 4 Division of Ratepayer Advocates (DRA) and Intervenor Testimony for the 2012 General Rate 5 Case (GRC). Cal Water wishes to acknowledge the poor economic conditions in effect during 6 the filing of this GRC and the subsequent continuing struggles facing the Company’s customers 7 during this time. This GRC does not occur in a vacuum and Cal Water takes note of the 8 hardships that many of the Company’s customers are experiencing at this time. Cal Water 9 notes the input recorded at the Public Participation Hearings. Cal Water would also like to point 10 out that due to the continuing economic difficulties facing its customers, the Company has 11 voluntarily canceled a number of projects that it felt were operational enhancements and not 12 strictly needed for day to day operations. The remaining items in the budget are needed for 13 long-term compliance, reliability, and safety issues. Darin Duncan will be sponsoring this book. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 1 1 2 CHAPTER 2: COST ALLOCATIONS 3 2.1. Introduction 4 This chapter discusses specifically the allocation of General Office Expense and Ratebase 5 to Districts. For a detailed discussion on the allocation of costs to out-of-state affiliates as well 6 as cost and revenue for non-tariffed products and services, please see the General Issues 7 Rebuttal Testimony (“Book 1”), Chapter 3. 8 9 2.2. Allocation of General Office Expense and Rate Base to Districts 10 After allocating expenses to its out-of-state affiliates and unregulated activities, the 11 remaining expenses for General Office (“GO”) are allocated to Cal Water’s ratemaking districts 12 for rate recovery since General Office does not have revenue generating activities that can 13 cover its operations. Cal Water allocates its GO expenses and ratebase costs to its operating 14 districts using a four-factor methodology. The four factors used for allocation are (1) the ratio of 15 gross utility plant in each district to the gross utility plant for all districts; (2) the ratio of each 16 district’s payroll expenses to the total payroll expense for all districts; (3) the ratio of active 17 service connections in each district to the total districts, and (4) the ratio of the districts’ direct 18 operating and maintenance expenses to the total of all districts. Each factor is given an equal 19 weight. Cal water’s allocation percentages are based on the most recent review of these values 20 using end-of-year 2011 data. DRA agrees with Cal Water’s methodology and allocation 21 percentages as shown in the table below. 22 23 Four-factor Allocations 24 District 4‐factor Allocation Antelope Valley 0.36% Bakersfield 15.32% Bayshore 10.04% Bear Gulch 5.61% Chico 5.55% Dixon 0.57% 2 Dominguez1 8.28% East Los Angeles 6.18% Grand Oaks2 0.02% Hermosa Redondo1 5.12% Kern River Valley 1.24% King City 0.64% Livermore 3.51% Los Altos 4.21% Marysville 0.78% Oroville 1.03% Palos Verdes1 5.98% Redwood ‐ Coast Springs3 0.10% Redwood – Lucerne3 0.43% Redwood Unified3 0.14% Salinas 6.06% Selma 1.17% Stockton 7.83% Visalia 6.97% Westlake 2.37% Willows 0.49% Total 100.00% 1 The Dominguez District, Hermosa Redondo District, and Palos Verdes Districts are part of the Rancho Dominguez consolidated district. There are shared expenses and ratebase that are captured at the consolidated level and distributed among the three individual districts. The shared costs are captured on a consolidated level based on the sum of the percentages attributable to the three individual