Fontana Water Company Water Rate Increase

Fontana Water Company
Water Rate Increase
2007 Update

Fontana Water Company rate case update- October 2007:
On April 12, 2007 the California Public Utilities Commission (CPUC) issued Decision (07-04-046) regarding the General Rate Case Application of the San Gabriel Valley Water Company-Fontana Water Division, A-05-08-021 filed August 5, 2005. This decision concludes almost two years of hearings and meetings with the CPUC regarding the Fontana Water Company's request for a rate increase of over 23.6% over a three year period. This would have amounted to a $10,931,400 rate increase.

The CPUC issued Decision 07-04-046 which was the amended alternate proposed Decision by presiding Commissioner Bohn. This Decision provided for several improvements to the rate making application of the Fontana Water Company. First and foremost it provided the rate payers a rate reduction based on funds that the water company handled inappropriately. This returned to ratepayers $1,650,000 in reduced rates for test year 2006-2007, or estimated 6.8% average rate reduction. This is a one time rate reduction and will only last for a short period, approximately 2-3 months, and rates will go back up to reflect the allowed increases by the CPUC (Advice Letters - May 15, 2007; May 31, 2007; June 1, 2007 ; June 15, 2007 ; October 9, 2007).

One key element that was added this year by the CPUC decision is a Capital Facility Fee for new development. All new connections are required to pay a fee that will help build water reservoirs, wells, and booster stations that our needed for this new growth. Previously the Water Company was allowed to charge current rate payers for these growth impacts and not new development, as is the water industry standard. This capital fee will generate several million dollars a year in revenue to build facilities needed for the housing growth.

The CPUC issued $60,000 in penalties to the Water Company for inappropriate dealings with its sister company Rosemead Properties, Inc. for an undisclosed affiliate land transaction.

The CPUC received over 60 letters and e-mails from the community voicing their displeasure over the current state of affairs with the water rates in the Fontana Water Company service area.

Unfortunately, the CPUC allowed in this decision the $34 million dollar Sandhill Water Treatment plant expansion. The City of Fontana and Fontana Unified School District vigorously opposed this capital project as being an unnecessary project that is related to growth than existing users needs. The one saving grace is that the new capital development fee should help offset some of the impact to the existing ratepayers.

What is next? The City of Fontana, FUSD, and Division of Rate Payer Advocates have appealed this decision. A rehearing has been requested to address items that we believe the current ruling failed to address in terms of the previous water rate case. The City awaits a decision on our request for rehearing.

The City plans on meeting with the San Gabriel Valley Water Company to discuss further ways of avoiding costly increases to our rates and how recycled water might be served in this community to help conserve our resources for drinking water needs. Stay tuned. The City also plans to embark on a water conservation education program for the community to encourage conservation , as water supplies may be affected over the next year due to the lack of rainfall and snow pack during the last eight years.

March 2007
The City of Fontana would like to say "Thank You" to those approximately 60 residents who responded to California Public Utilities Commission (CPUC) regarding the important community issue of water rate increases that have been proposed by the Fontana Water Company. If you did not know already the CPUC was originally supposed to rule on this water rate case on March 15, 2007. However, the City of Fontana received notice on March 14, 2007 that this item was being removed from the CPUC agenda and will be placed on the April 12, 2007 CPUC agenda for consideration. The City of Fontana and Fontana Unified School District will continue to its efforts to make sure the CPUC is well informed of the rate situation in this community. It is important that the CPUC understand the outlandish disparity in rate making by the Fontana Water Company (San Gabriel Valley Water Company) in our community. Since we have been granted more time on this matter, one month, we ask you to continue to share your thoughts with the CPUC regarding how high your water bills are and your concern with additional unnecessary rate increases.

We have asked our citizens to notify the CPUC what your actual water bills are like. It has been reported that the typical water bill for our residents is around $40 per month. Many residents have complained that their water bills are $70 or more and over $100 during the summer months. The City requests that you notify the CPUC about

Your rates are already much higher than surrounding communities and that additional rate increases are unjustified;
If they approve Fontana Water company's request, rates may go up even more;
Include in your email your water bill amount from December or January and if you have information on your summer bill, include that amount in the email as well;
Tell the CPUC that they should not approve Fontana Water's request to expand the Sandhill Water treatment plant on Lytle Creek. This $35 million project is a waste of investment since it will produce little or no benefit in the summer months when the demand is at its highest;
Let the CPUC know that Fontana Water Company cannot be trusted given their prior track record -- especially considering that they have already begun the Sandhill Expansion project without approval from the CPUC.

Email your comments to the CPUC at public.advisor@cpuc.ca.gov or contact them at the Public Advisor's Office at: CPUC Public Advisor, 505 Van Ness Avenue, Room 2103, San Francisco, CA 94102; or call 1-866-849-8390 or 1-415-703-2074. Please copy the City of Fontana on all correspondence at .

This rate increase proposal will hurt every customer served by Fontana Water. That includes the City of Fontana parks, Fontana Unified School District, and every business and resident served by this company. Enough is enough - we already pay far too much for a necessity in life.

Background:
It has been a year since the California Public Utilities Commission held evidentiary hearings in the City of Fontana and up in San Francisco to debate the proposed General Rate Case application of the San Gabriel Valley Water Company – Fontana Division regarding Application No.-A0508021. This water Rate increase intervention process started back September 2005. The City of Fontana, Fontana Unified School District, and the Division of Ratepayer Advocates of the CPUC began to work on opposing the proposed water rate increase of the Fontana Water Company.

The Fontana Water Company who already has the highest rates in the surrounding area, they are almost 1.85 times greater (Water rate comparison 2007), has requested additional rate increases in the following years..

13.1% for 2006 equal to $5,662,900
6.3% for 2007 equal to $3,072,500
4.2% for 2008 equal to $2,196,000
Total Increase equaling 23.6% or $10,931,400

The City of Fontana and the FUSD asked for a re-hearing on the previous Water Rate Decision-04-07-034 on August 25, 2005. This request was granted and reviewed by the Administrative Law Judge Barnett. The outcome of the limited rehearing authorized by ALJ Barnett is summarized in the following paragraphs.

The Administrative Law Judge summarized the following:

The limited rehearing shall be consolidated with the next general rate case in 2005-(Current rate Case as of today).
The rehearing shall see if San Gabriel Valley Water has met its burden of proof requesting a rate increase.
San Gabriel is allowed to continue billing and collect rates ordered in previous decision and track in a memorandum account.
City of Fontana request for oral argument is denied.

These items are to be addressed as part of this current general rate case application. The City of Fontana has been expressly concerned over the length of time this water rate case has taken. It was initially believed that a decision would have been handed out by June of 2006. For unknown reasons this process has lingered on.

In fact the City of Fontana received a Draft Preliminary Decision from ALJ Barnett back in October 2006. The initial preliminary draft proved to be favorable to the ratepayers in providing some relief from the water company’s proposed increases. However, we received notice on January 29, 2007 that along with ALJ Barnett proposed decision that Commissioner Bohn (presiding Commissioner on this case) was proposing an alternate proposed decision. This alternate proposed decision was unexpected and significantly different. The differences in Commissioner Bohn’s alternate Decision favor the water company and give them an increase larger than they had asked for in the initial application.

	ALJ Barnett Proposed Decision Points	Commissioner Bohn Alternate Proposed Decision Points
1.	Rate reduction 2007-08 $2,448,800	Rate Reduction 2007-08 $1,650,000
2.	Adopts Rate Base of $81,401,500	Adopts Rate Base of $86,123,679
3.	Revenue reduction of $1,120,100	Revenue Reduction of $276,037
4.	Refund to ratepayers of $2,874,900	Refund to Ratepayers of $573,278
5.	Adopts 10% increase limit to rate base	Exempts $35 million dollar Sandhill project plus 10%
6.	Sandhill not authorized by Advice letter	Authorizes Sandhill by Advice letter
7.	Office building allows Office Building @ $3 million	Allows Office building of $4.9 million
8.	Orders sale of existing facilities with no 790 Treatment from rate base 790 treatment allowed	does not order sale, require removal
9.	Gain on sale awards $6,672,371 to ratepayers	Gain on sale awards $4,188,712 to ratepayers
10.	Condemnation proceeds do not apply to Section 790	Defers this issue to Resolution 04-09-003
11.	Addresses issue condemnation sales	Defers issue
12.	Addresses issue of inverse condemnation proceeds	Defers issue
13.	Denies deduction of litigation expenses contamination proceeds	Deducts $208,554 sharing cost 50/50 with ratepayers/shareholders
14.	Levy’s $40,000 penalty for rules violations	Levy’s $60,000 penalty for rules violations
15.	Closes case	Leaves proceeding open to consider disposition of condemnation proceeds.

Based on the comparison of these decision it becomes clear that the alternate proposed decision benefits the Fontana Water Company and if approved would increase its rates much higher than originally proposed. (See Proposed Decision and Alternate Proposed Decision PDFs).

On February 13, 2007, Mayor Mark Nuaimi released a Press advisory regarding suspiciously timed article about the Sandhill Water Treatment Plant upgrades reported in the Riverside Press Enterprise on February 5, 2007. This newspaper article also was used by a consultant to the Fontana Water Company (Mr. Tom Soto) to send to a CPUC Commissioner Gruenich. The City of Fontana found out about this and began inquiring about the impropriety of these actions. These would be considered improper Ex-Parte Communications and would appear create some positive influence for the Fontana Water Company’s rate case. The City of Fontana and FUSD immediately voiced concerns over this matter and notified its elected leadership in Sacramento. (Special Media Advisory PDF)(4.6MB) .

Relevant Documents for your review - (Require Adobe Acrobat Reader)
Rate Comparison - Fontana Water Company 2007 (17.8KB)	California Public Utilities Commission (will open in a new window)
Decision Rehearing Order (38KB)	Digest of differences between the Proposed Decision and the Alternate Proposed Decision (638KB)
Sun Newspaper Article 2/14/07 (987KB)	California Public Utilities Commission Proceeding A0508021 Date Filed: August 5, 2005 (will open in a new window)
Residents may write their Legislators to let them know of their displeasure over this water rate issue using the links below. If you are frustrated with the Fontana Water Company rates and would like to write your State Representatives the City of Fontana is providing you with a Draft letter you may mail or e-mail to your State Representatives. You may wish to write in your own words your thoughts on this matter. It is very important that the State Officials hear from you on this matter. We have linked up those e-mail addresses to this site for your ease of use.
Wilmer Amina Carter – Assembly member 62nd District Frances Choi and Robin Coaxum (Chief of Staff/Primary Office Contacts) Bill Emmerson – Assembly member 63rd District Joe Justin and Teresa Trujillo (Chief of Staff/Primary Office Contacts) Gloria Negrete-McLeod – State Senator 32nd District Don Wilcox (Chief of Staff) Bob Dutton – State Senator 31st District Russell Lowery (Chief of Staff)