2017 Suburban Water Systems General Rate Case

Background

Suburban Water Systems (Suburban), serves 75,000 customers in two customer service areas (San Jose Hills and Whittier/La Mirada), with operating revenues of $73 million/year.  Suburban's parent company, Southwest Water Company, provides centralized functions such as accounting, regulatory, and executive.

Suburban filed a general rate case application with the CPUC on January 3, 2017, requesting authority to increase rates for water service by:

  •  2018: $11,020,932 (15.25%) 
  •  2019: $6,148,017 (7.38%)
  •  2020: $5,543,562 (6.20%)
     
  • 3-Year Cumulative Total = $22.7 million (28.83%)
      

Suburban is requesting (among other things) an additional:

  • $84 million in Capital Additions (2017-2019)
  • $9.9 million in Payroll Expenses
  • $42.1 million in Operating Expenses except Payroll Expenses
  • $6.0 million in Parent Company and Utility Group Expenses
  • $9.4 million in Taxes

  

 

ORA's Position

 ORA performed an in-depth review of Suburban's application and recommends the following revenue increases:
 
  •  2018: $509,209 or 0.64%
  •  2019: $3,114,447 or 3.92%
  •  2020: $2,588,333 or 3.12%
      
  • 3-Year Cumulative Total= 6.2 million (7.68%)
 

Suburban over-estimated the revenue needed for capital improvement projects, operating expenses, taxes, and parent company and utility group expenses assigned to Suburban.

A smaller rate increase is appropriate because of better than average rainfall this year and the recent Governor's Order lifting  mandatory drought restrictions.  As a result of these events, customers will likely increase their water consumption, and Suburban will see higher revenues than it estimates.  Higher revenues will offset the revenue increase needed to reliably serve customers.

Suburban's request of $84 million for capital projects over the next three years is unreasonable because Suburban's service areas are mostly built out and there has been little or no growth.  A capital projects budget of $45 million over the same time period (a reduction of 46%) is more reasonable.  

  

See: 

 

 

Current Proceeding Status 

See the CPUC proceeding docket.