The company also said it's planning to file for a general rate increase this July.

 

Last summer the company received a 120-percent rate increase, with some breaks for Lucerne users, said Craig Bach, president of both Friends of Locally Owned Water (FLOW) and Lucerne Community Water Organization (LCWO), two groups that formed to fight that increase, which originally was proposed at 273 percent.

The company's net profit, after expenses, for 2005 was $24.9 million.

In an application filed with the CPUC on Dec. 21 by Cal Water attorney Lynne P. McGhee, the company requests the rate increase “to fully fund its retiree healthcare plan commonly referred to as a 'Postretirement Benefits other than Pension' (PBOP).”

PBOPs include non-cash and other welfare benefits payable to employees after their retirement. In Cal Water's case, these benefits include medical, dental and vision coverage; treatment of alcohol and chemical dependency; mental health care; prescription drug coverage and a life insurance policy of $5,000.

Cal Water's documents report that eligible retirees are 58 years old or older. Retirees also contribute to the cost of health benefits by paying a monthly premium; those without other coverage pay $245 a month while those with other coverage pay $110 a month.

Cal Water is requesting that its entire PBOP expense “be included in customer rates.”

Mark your calendar, the overall rate increase per customer, would amount to $0.12 per billing cycle, and would be in effect until Dec. 31, 2021. Cal Water Co. serves 500,000 customers; $.12 per customer per month would amount to $60,000 monthly, or $720,000 annually.

“It's just one more example of Cal Water putting its business on the backs of ratepayers, which is a fact that seems to be encouraged by the CPUC,” said Bach. “They all work together.”

In the background portion of the 15-page application – accompanied by another 263 pages of exhibits and explanatory documents – Cal Water notes that utilities companies previously used a pay-as-you-go basis for financial accounting standards, but have since been required to use an accrual system.

That change, Cal Water stated, “requires companies to recognize PBOP costs during the service life of the employee and not when the employee uses benefits during retirement.”

The result, according to Cal Water, is that the accrual system costs more.

Cal Water notes in its application that the CPUC has already issued a decision that allows PBOP expenses to be included in rates.

Cal Water asks the CPUC for permission to collect the full PBOP expense over a 15-year period.

The application also states that Cal Water “has experienced a dramatic increase in its healthcare costs.”

The company claims that it has been deferring the PBOP expense difference – which, it said, approaches $2.5 million annually. Further, Cal Water said having to write off this expense, which it called a “regulatory asset,” would “have a significant financial impact on California Water Service Group's financial statements.”

The company also proposes that “continuing to record a significant portion of PBOP expense as a regulatory asset is not in the best interest of all ratepayers and may result in overcharging future ratepayers.”

Cal Water goes on to state that “it is fair and equitable and in the best interest of all its ratepayers to begin recognizing these additional costs company wide at the same time.”

The company reports it has 24 separate rate districts, and that all customer rates should be adjusted simultaneously. “This will avoid ratepayers paying different amount and disproportionately recognizing the PBOP liability.”

A schedule in Cal Water's application proposes that the rate increase will be approved by May 10.

Cal Water states in its application that it is planning to file another general rate case application with CPUC in July, and asks that it approve the PBOP application prior to that.

Bach confirmed that LCWO and FLOW have heard of the proposed rate increase, which this time around would amount to 14 percent companywide.

Most of Cal Water's users won't know about this recent rate increase until it's close to being approved.

That's because even though the application was filed only a month ago, the protest period closed on Saturday, Jan. 20. Customers in most districts won't receive a mailed notice from the company until well into February, and Lucerne customers, who have a 60-day billing cycle, may not see a mailing until nearly March.

Bach said LCWO will make comments to the CPUC this week about the PBOP increase, although he said he believes it's a “foregone” conclusion.

For anyone interested in submitting a comment on the increase to the CPUC, email This email address is being protected from spambots. You need JavaScript enabled to view it., call 866-849-8390 (toll free) or 415-703-2074, or write to the CPUC, Public Advisor's Office, 505 Van Ness Avenue, San Francisco, CA 94102.

Be sure to mention that you are writing about Application 06-12-025, per Cal Water's instructions in exhibit 13.

E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..

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