If last week’s initial reaction to the announcement of Hillview Water Companies proposed 46.3% rate increase is any indication, next week’s public meeting at Yosemite High School should be well-attended.
The meeting will be held at 6:30 p.m., Sept. 3, in the Yosemite High School cafeteria to explain the California Public Utilities Commission’s (CPUC) review process, and the details of the proposed rate increase. This increase would raise company annual revenues by $653,296 - an amount needed, according to company officials, to off-set rising operational costs, including greater costs of compliance with state regulations since the last increase in 2009.
The proposed rate increase would affect about 1,470 customers in Oakhurst, Sierra Lakes, Goldside, Hillview, Coarsegold, and Raymond.
A number of Hillview customers reacted negatively to the proposed rate increase on social media, after the initial story appeared on the Sierra Star’s web site (sierrastar.com) and Facebook page.
Hillview President Roger Forrester, and Manager James Foster, will be at the meeting to explain in detail reasons for the requested rate increase.
CPUC Regulatory Analyst Moises Chavez will conduct the meeting, and will explain how the CPUC will analyze the proposed increase to rates and fees. California law requires Hillview to show to the CPUC’s satisfaction that an increase is justified before it may raise its rates.
The more than 200-page rate increase request, with company historical data, includes Hillview’s operating expenses, and revenue for the past four years (2011 - 2014), and a forecast of revenues and expenses for 2015. The report was compiled by the accounting firm Peasley, Aldinger & O’Bymachow of Huntington Beach.
The report shows that in 2011, the company’s revenue was $1.6 million, and expenses were slightly more than $1.4 million. In 2014, revenue had grown to $1.68 million, while expenses climbed to $1.53 million. The net profit of the company in 2014 was $60,417, and does not include additional expenses that are not covered by rate payers.
The company projects 2015 revenue, at current rates, to be $1.41 million (down from 2014 due to the company’s projection that water sales will decrease by about 25% because of the mandated state reductions in water use), with expenses of $1.59 million, a loss of $180,000.
This year’s projected expenses include $784,000 for labor, management/office salaries, and employee benefits, $170,000 for purchased power, $88,000 for office supplies and expenses, $67,000 contract work, $59,000 transportation, $55,000 plant maintenance, and $49,000 for insurance.
Receiving the full requested rate increase would cover the company’s projected expenses and provide a profit for Hillview.
According to Chavez, the company is requesting a Rate of Margin (ROM) of 21.21% which is allowed for water utilities with less than 2,000 service connections.
“Under ROM rate making method the company’s revenue requirement would be based on the company’s overall expenses which include operating and maintenance and depreciation expenses, income and other taxes, and the operating margin percentage,” Chavez said. “In this case the operating margin percentage the company is requesting in 21.21%.”
The CPUC sets water utility rates using a cost-of-service rate making method which is intended to allow water utilities to: 1) recover in rates operating and capital expenses necessary to provide safe and reliable water service; and 2) earn a rate of return on utility investments.
The CPUC is not required to have a public meeting since the company’s filing is being handled through the ‘advice letter’ process and not through a formal application where an administrative law judge would be assigned to the case. However, since the public meeting for the Hillview’s request is informal, CPUC’s practice is to give customers at least 20-day advanced notice prior to the meeting.
According to Chavez, CPUC staff will be conducting a thorough investigation of Hillview’s rate increase request which will include, 1) evaluating the company’s operations and expenses since the company’s last rate increase in 2009, 2) reviewing company’s expense accounts and only those expenses that are deemed reasonable will be allowed in rates, and 3) reviewing and evaluating the capital improvements/utility investments since the company’s last rate increase along with expenditures associated with those improvements to determine whether improvements were needed.
Following staff’s investigation, a Draft Resolution will be prepared with recommendations for the CPUC’s consideration. The Draft Resolution will be issued for 30-day public comment period before the CPUC considers the resolution for approval.
Chavez said the Draft Resolution is expected to be issued for public comment in October and the CPUC will make its decision in November.
“After the proposed resolution is drafted with my recommendations and findings, it will be issued for 30-day public comment and a copy will be provided to the customers that attend the meeting and on the service list for the company’s advice letter filing, so customers will have another opportunity to comment on the Draft Resolution containing the findings and recommendations,” Chavez said.
If approved as requested, the proposed monthly rate increases to the average homeowner (3/4 inch meter) would increase from $32.23 to $49.70 per month. There are about 1,300 Hillview service connections in that category. Another 68 customers would see a monthly increase from $51.74 to $82.83 (1 inch meter).
Rate increases are also being proposed for private fire protection service, private fire hydrant service, and metered service for trucks.
In 2014, Hillview provided its customers with 198 million gallons of water - an average of 135,000 gallons per connection. The projection for 2015 usage is just short of 107,000 gallons per connection, 25% less than 2013 (142,000 gallons) per Gov. Brown’s state-wide executive order to reduce consumption.
Three new treatment facilities planned
Hillview’s Foster said that through the rate increase request the company has received lots of support.
“Obviously, no one would want to pay more for anything if not necessary, but we have received support for the way we have steadily improved our facilities and operations over the years and stayed on track to get the facilities, personnel, and equipment we need,” Foster said. “We have received support from our customers, Cal Fire, and the agencies to which we report for the way we have improved in virtually every aspect. Even through some very intense emergency situations, like wildfires and storms, we have been able to keep the water flowing and even give some emergency assistance outside our district.”
Foster explained the Hillview water systems are in the process of building three new state of the art, grant funded treatment facilities that will remove the ubiquitous Uranium, Arsenic, Iron, and Manganese found in most mountain deep hard rock well water.
“It has been a very long, very difficult process, but we are excited because it is happening,” Foster said. “The Sept. 3 public meeting will be a chance to update everyone on all the great things that are finally happening for their water system.”
The CPUC staff will make a thorough investigation of Hillview’s request, and will have the options of granting the request in whole, in part, or denying it.
Sept. 2 deadline
Hillview Water Co. customers, who would be affected by the rate increase, have until Sept. 2 to write a letter of protest or other response to both the CPUC and Hillview concerning the proposed rate increases. Protest letters must state the facts constituting the grounds for the protest.
The mailing and email addresses are: CPUC, Division of Water and Audits, 505 Van Ness Ave., San Francisco, Calif., 94102, fax (415) 703-2481 - email, email@example.com. Hillview Water Co., P.O. Box 2269, Oakhurst, Calif., 93644 - email, firstname.lastname@example.org.
A copy of the rate increase request can be seen at the Oakhurst Branch Library, and a copy of the rate increase request can be mailed to those interested for 10 cents per page by calling Hillview at (559) 683-4322.