Liberty requests 2-year ‘rate freeze’ in Apple Valley (December 16, 2016)
APPLE VALLEY — The largest water provider here has requested a one-year delay in filing its next general rate case, a move company officials say will eliminate rate increases for two years in the town.
Liberty Utilities, Apple Valley’s current rates will increase nearly 5 percent on Jan. 1, but President Greg Sorensen said those base rates will effectively be locked in until Jan. 1, 2019, if the CPUC approves the company’s request.
During this period, Sorensen said in a statement,
Liberty will make its mandated annual regulatory filings for a customer credit or surcharge, as the case may be, to ensure it collects only the 2017 authorized revenue levels approved by the CPUC.
Essentially, those filings determine whether a customer surcredit or surcharge is due based on the reconciliation of costs to deliver water and the revenue Liberty receives from customers.
Liberty also requested to combine regulatory filings for its California water systems in southeast Los Angeles County and Apple Valley into one General Rate Case filing in 2018 for rates in 2019 through 2021, the statement shows.
Combined filings can reduce regulatory costs, with savings passed on to customers, according to Sorensen, who said the request was made
to be more efficient and expand our customer outreach efforts.
In that vein, Sorensen added that the request provides an opportunity to engage residents
more deeply about the operations and maintenance of, as well as investment in, the water system.
We want customers to have meaningful input regarding how Liberty maintains the water system to support current and future residents, Sorensen said.
We also want to collaborate with community leaders to support economic development efforts by helping existing businesses and securing new investments that will create new Apple Valley jobs.
Town officials have repeatedly touted local control of the water system as a key driver behind the eminent domain action against Liberty insofar as it would allow residents to air any grievances locally rather than in writing to the CPUC’s Office of Ratepayer Advocates in San Francisco.
Liberty’s request, then, is a move that could work to counter that argument as a show of bolstered customer outreach that Sorensen said is the right thing to do
to demonstrate our commitment, transparency and accountability.
Mayor Scott Nassif, however, didn’t agree. He said calling this
cheap PR stunt a
rate freeze is misleading.
There is nothing in the request to suggest that this has anything to do with protecting ratepayers in Apple Valley, Nassif said.
A rate increase for 2017 has already been granted and the rate case they are talking about ‘delaying’ would be applied retroactively to 2018.
An Office of Ratepayer Advocates letter released Thursday opposed the request, which could decrease the likelihood of CPUC approval. In the letter, the ORA cited, among other reasons, a need to examine Liberty’s next general rate case
as soon as possible.
Going forward, there is uncertainty regarding Liberty Apple Valley’s capital spending relative to the levels adopted by the Commission, the letter stated.
… If Liberty Apple Valley’s capital spending remains at the same reduced level for 2017 this escalation increase could further exacerbate rates that are too high.
Given this recent decrease in capital spending in 2016, the Commission should require Liberty Apple Valley to move forward with its GRC on schedule beginning in January, 2017 to examine rates that will be effective January 1, 2018.
The ORA also expressed concern over the possibility of Liberty’s customers paying rates
associated with capital budgets that are not being spent on infrastructure as a result of the requested delay.
In other words, Liberty has charged the ratepayers for capital improvements to the system, but they have collected the money and not spent it to improve the system.
In October, Liberty filed a motion in court for authorization to make improvements to its water system. Officials said Thursday that its decrease in capital spending is a result of not being able to make improvements amid the town’s eminent domain action.
In response to the letter, Liberty officials said they respect the ORA’s opposition, but added that the decision is ultimately made by the CPUC. The company expects a decision by the end of the year.
Source: Matthew Cabe, Daily Press