CALIFORNIA PUBLIC UTILITIES COMMISSION WATER DIVISION. Advice Letter Cover Sheet

Transcription

1 CALIFORNIA PUBLIC UTILITIES COMMISSION WATER DIVISION Advice Letter Cover Sheet Utility Name: California Water Service Company Date Mailed to Service List: 7/21/17 District: California Regulated Service Areas CPUC Utility #: U-60-W Protest Deadline (20 th Day): 8/10/17 Advice Letter #: 2268 Authorization: Description: Review Deadline (30 th Day): 8/21/17 Tier: 1 X 2 3 Compliance Requested Effective Date: 7/21/17 Request to establish a Sites Reservoir Memorandum Account Rate Impact: N/A The protest or response deadline for this advice letter is 20 days from the date that this advice letter was mailed to the service list. Please see the Response or Protest section in the advice letter for more information. Utility Contact: Natalie Wales Utility Contact: James Polanco Phone: Phone: (408) nwales@calwater.com jpolanco@calwater.com DWA Contact: Tariff Unit Phone: (415) Water.Division@cpuc.ca.gov DWA USE ONLY DATE STAFF COMMENTS [ ] APPROVED [ ] WITHDRAWN [ ] REJECTED Signature: Comments: Date:

2 CALIFO RN IA W ATE R SE R VI CE COMPANY 1720 NORTH FIRST STREET SAN JOSE, CA (408) F (408) July 21, 2017 Advice Letter No To The Public Utilities Commission of the State of California: California Water Service Company (Cal Water) hereby transmits for filing the following changes in its tariff schedules listed below: New/Revised Cancelling CPUC CPUC Sheet No. Title of Sheet Schedule No. Sheet No. XXXXX-W Preliminary Statement AU XXXXX-W XXXXX-W Table of Contents Page 2 XXXXX-W XXXXX-W Table of Contents Page 1 XXXXX-W Purpose With this advice letter, Cal Water requests authorization from the California Public Utilities Commission (CPUC) to establish a Sites Reservoir Memorandum Account (Sites MA), effective July 21, 2017, to track the incremental costs associated with participation in the Sites Reservoir Project for the benefit of Cal Water s customers. Background The Sites Reservoir Project ( Sites Project ) is formally known as the North-of-Delta Offstream Storage Project ( NODOS ). 1 The proposal for a Sites Reservoir has a long history and originated in the 1980s in a proposed Stage II of the State Water Project. In brief, an offstream reservoir approximately 78 miles northwest of Sacramento would be created from the winter flood flows of the Sacramento River. A map showing a diagram of the proposed facilities is provided as Attachment A. 2 Operated in coordination with the State Water Project, the Sites Reservoir would store water as well as operate as a hydroelectric plant. Attachment B to this advice letter is a document providing answers to Frequently Asked Questions about the Sites Project. 3 1 The name refers to the small community of Sites located in a Northern California valley in Colusa County. 2 Sites Reservoir Map, (accessed 7/20/17). 3 Sites Project: Frequently Asked Questions, (accessed 7/20/17).

3 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268, Sites Reservoir Memorandum Account Page 3 Discussion Overview: The Sites Project Authority ( Authority ) is a joint powers agency made up of local governmental entities within the Sacramento River watershed. In Phase 1 of the Sites Reservoir Project, participants are pursuing Proposition 1 funding through the Water Storage Investment Program described below: In November 2014, California voters approved Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act of Chapter 8 of Proposition 1 provides $2.7 billion for public benefits associated with water storage projects that improve the operation of the state water system, are cost effective, and provide a net improvement in ecosystem and water quality conditions, in accordance with provisions contained in Chapter 8 (Water Code section (b)). The California Water Commission (Commission), through the Water Storage Investment Program (WSIP) competitive public process, will award and distribute this funding. 4 The California Water Commission ( CWC ) indicates that [j]ust over $2.5 billion is available for project funding of eligible capital costs. 5 The timeline is as follows: August 2017: applications submitted to the CWC will be reviewed by several state agencies; December 2017: CWC releases preliminary cost/benefit scores, and begin preliminary negotiations with project proponents; June 2018: CWC selects final projects. Phase 1 of the Sites Project: Under a Phase 1 Reservoir Project Agreement ( Agreement ) interested parties are participating in the development, financing, and construction of a Sites Reservoir Project that is in a conceptual phase. 6 In return, they will receive a first right to contract for a share of any water supply that is developed, and for storage capacity that may be available from the Sites Reservoir Project. 7 Unlike other potential proposals that include dams, the Sites Project is an off-stream facility that would divert surplus flows from the Sacramento River and its tributaries, but would not stop the river. The project would require the Department of Water Resources to transfer water rights of over 3 million acre-feet to the Authority. With a budget of over $15 million, Phase 1 of the Sites Project includes preparing studies for reservoir operations, studies for the design and construction of the reservoir, and an 4 Layperson s Guide to the Water Storage Investment Program Regulations, (accessed 7/16/17). 5 Water Storage Investment Program, Application Instructions, page 4 (accessed 7/16/17). 6 Sites Project Authority s Amended and Restated Phase 1 Reservoir Project Agreement (11/21/16 Draft) ( Draft Agreement ) at page 7 (Section 5(a)). 7 Id. at page 7 (Section 5(b)).

4 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268, Sites Reservoir Memorandum Account Page 4 analysis for potentially including pumped storage to provide renewable energy. 8 The total project cost is currently estimated to be $4.4 billion. 9 Cal Water Involvement: In response to an invitation from the Sites Authority for additional entities interested in participating in Phase 1 of the Project, Cal Water submitted a Proposal to Participate, contingent upon approval by the Commission, on August 1, 2016 ( 8/1/16 Cal Water Proposal ). 10 As described in the letter, Cal Water s principal objective(s) that support project participation relate to the company s long-term resource planning goals of developing an increasingly diverse and reliable water supply throughout the State of California. This companywide effort is principally aimed at addressing a host of current and future concerns pertaining to population growth, sustainable groundwater and surface water management, and climate stress. 11 In addition to pursuing recycled water and desalination opportunities in both the private and public/private sectors, a key component of Cal Water s long-term planning is the augmentation and development of new surface water and groundwater storage opportunities. Cal Water s involvement in the Sites Project aligns with the responsibility it has to its customers to engage in regional solutions. Moreover, with its connection to the State Water Project, the Sites Project has the opportunity to provide benefits to multiple Cal Water districts throughout the State. Counter-Offer and Acceptance: While Cal Water initially requested 35,000 acre feet of Class 1 water (priority status at a not-to-exceed cost of $60 per acre foot), the Sites Authority provided a counter-offer ( 10/11/16 Sites Counter-Offer ) proposing an allocation of 35,000 acre feet of Class 2 water (non-priority status at a not-to-exceed cost of $30 per acre foot). 12 While Cal Water accepted this counter-offer, it is not joining the Reservoir Project Agreement ( Agreement ) as a member of the Joint Authority. 13 Instead, to address the possibility that Cal Water s participation as a privately-owned public utility could jeopardize eligibility for 8 Draft Agreement at Section 5.1 and Section 7.2 (Table 1). 9 Sites Project: Frequently Asked Questions at page Letter from Robert Kuta, Vice President-Engineering, Cal Water, to Ms. Anne Nordyke, Board Clerk for the Sites Reservoir Project, dated 8/1/16 ( 8/1/16 Cal Water Proposal ). 11 8/1/16 Cal Water Proposal at page 2 (emphasis added). 12 Letter from James C. Watson, General Manager, Sites Project Authority, to Robert Kuta, Vice President-Engineering, Cal Water, dated 10/11/16 ( 10/11/16 Sites Counter-Offer ) at page Letter from James C. Watson, PE, General Manager, Sites Project Authority, to Robert J. Kuta, Vice-President, Engineering, California Water Service Company, dated April 28, 2017, counter-signed by Robert J. Kuta ( 4/28/17 Side Agreement ).

5 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268, Sites Reservoir Memorandum Account Page 5 Proposition 1 funding, Cal Water is considered a non-member participating party of the Agreement. 14 The Sites Reservoir MA Meets the Criteria for a New Memorandum Account As discussed below, the proposed Sites Memo Account meets all of the Commission s criteria for the creation of a new memorandum account. 15 The Sites Project that is well-suited to memo account treatment because it offers the potential for significant customer benefits, but due to the size and scope of the project, the timing and costs of the project are uncertain. 16 A memo account will allow Cal Water to proceed, and will give the Commission the opportunity to consider at a later date whether costs tracked in the account are appropriate for recovery through rates. If the Sites MA is approved, Cal Water will provide a status update on the memo account in its 2018 GRC, and will identify potential next steps to the extent that they can be determined. Whether through a general rate case or in a Tier 3 advice letter, the Commission will have the opportunity to review all incremental costs tracked in the proposed Sites MA for reasonableness, and to determine the appropriate regulatory treatment of those costs. The expense is caused by an event of an exceptional nature that is not under the utility s control. Several aspects of the Sites Reservoir Project are not within Cal Water s control. For its share of the costs of preparing the Proposition 1 application, Cal Water received its first invoice from the Sites Authority in the amount of $574,700 on May 8, 2017, and expects to receive one or more additional invoices soon to reflect costs still being incurred to finalize the Project s Proposition 1 application. The amounts and timing of future invoices will depend upon the coordinated decisions of the Phase 1 participants and the actions of the California Water Commission. Expense cannot have been reasonably foreseen in the utility s last GRC and will occur before the utility s next scheduled rate case. Cal Water could not have foreseen its potential involvement in the Sites Reservoir Project in time to submit a proposal in its last rate case, which was filed in July Californians did not 14 Id. at page 1. In addition, Cal Water and the Authority entered into a side agreement that would allow Cal Water to amicably separate from the Reservoir Project Agreement, with refunds if appropriate. Id. at page The Commission s criteria are listed as they appear in Resolution W-4824, California-American Water Order Authorizing Memorandum Account to Track Costs Incurred to Address the State Water Resources Control Board Cease and Desist Order for Unauthorized Diversion of Water from the Carmel River in the Monterey District (April 8, 2010), at page Note that, while documents exchanged between the Authority and Cal Water contain references to Commission approval of Cal Water s involvement in the Sites Reservoir Project, Cal Water is not seeking that approval here. Instead, Cal Water s request is limited to authority to open a new Sites Reservoir memorandum account.

6 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268, Sites Reservoir Memorandum Account Page 6 approve Proposition 1 funding until late 2014, after which Phase 1 of the Sites Project was developed. Cal Water s next rate case will be filed in July As discussed above, Cal Water has already received an invoice for its involvement in Phase 1. If the project continues, future Sites Project activities can be addressed in the 2018 GRC, however Cal Water will continue to incur costs prior to new rates going into effect on January 1, Expense is of a substantial nature in the amount of money involved. While Cal Water s first invoice is for $574,700, the Agreement allows Class 2 water to be charged up to $30 per acre-foot. 17 For the 35,000 acre-foot of Class 2 water potentially allocated to Cal Water, Cal Water could be requested to pay up to $1.05 million just for Phase 1 of the Sites Project. If the Sites Project goes forward, the total cost for the project is currently estimated to be $4.4 billion. Ratepayers will benefit by the memorandum account treatment. The Commission explained in D that ratepayers will benefit from creating this memorandum account because the account will only allow Cal Water to record these costs, and the costs will be subject to ratemaking review by the Commission. 18 The same rationale applies to the proposed Sites Reservoir Memo Account. The Sites Project itself has the potential to create significant ratepayer benefits; if successful, it could mitigate water supply reliability concerns and fulfil regulatory requirements in multiple Cal Water districts throughout the State. Requested Effective Date This advice letter is submitted with a Tier 2 designation pursuant to Water Industry Rules 7.3.2(5) and (7) of General Order 96-B. Please note that Cal Water is requesting that this filing become effective on July 21, 2017, the date of this advice letter. The Sites Project Authority is requesting that Cal Water pay a May 8, 2017 invoice for $574,700 as soon as possible. Cal Water expects to receive one or more additional invoices soon to reflect costs still being incurred to finalize the Project s Proposition 1 application. Authorizing July 21, 2017 as the effective date of a new Sites MA will allow Cal Water to track Sites Project costs starting with this first payment. Notice Customer Notice: This is a Tier 2 advice letter that does not require customer notice because there is no increase in rates. 17 This is amount is for 35,000 acre-feet of Class 2 water at $16.42 per acre-feet. 18 D at 3.

7 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268, Sites Reservoir Memorandum Account Page 7 Service List: In accordance with General Order 96-B, General Rules 4.3 and 7.2, and Water Industry Rule 4.1, a copy of this advice letter will be mailed or electronically transmitted on July 21, 2017 to competing and adjacent utilities and other utilities or interested parties having requested such notification. Response or Protest Anyone may respond to or protest this advice letter. A response supports the filing and may contain information that proves useful to the Commission in evaluating the advice letter. A protest objects to the advice letter in whole or in part and must set forth the specific grounds on which it is based. These grounds are: (1) The utility did not properly serve or give notice of the advice letter; (2) The relief requested in the advice letter would violate statute or Commission order, or is not authorized by statute or Commission order on which the utility relies; (3) The analysis, calculations, or data in the advice letter contain material error or omissions; (4) The relief requested in the advice letter is pending before the Commission in a formal proceeding; or (5) The relief requested in the advice letter requires consideration in a formal hearing, or is otherwise inappropriate for the advice letter process; or (6) The relief requested in the advice letter is unjust, unreasonable, or discriminatory (provided that such a protest may not be made where it would require relitigating a prior order of the Commission.) A protest shall provide citations or proofs where available to allow staff to properly consider the protest. A response or protest must be made in writing or by electronic mail and must be received by the Division of Water and Audits within 20 days of the date this advice letter is filed. The address for mailing or delivering a protest is: Tariff Unit, Water Division, 3 rd floor California Public Utilities Commission, 505 Van Ness Avenue, San Francisco, CA water_division@cpuc.ca.gov On the same date the response or protest is submitted to the Division of Water and Audits, the respondent or protestant shall send a copy by mail (or ) to us, addressed to: Natalie Wales California Water Service Company 1720 North First Street, San Jose, California Fax (408) or nwales@calwater.com

8 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268, Sites Reservoir Memorandum Account Page 8 Cities and counties that need Board of Supervisors or Board of Commissioners approval to protest should inform the Division of Water and Audits, within the 20 day protest period, so that a late filed protest can be entertained. The informing document should include an estimate of the date the proposed protest might be voted on. The advice letter process does not provide for any responses, protests or comments, except for the utility s reply, after the 20 day comment period. Replies The utility shall reply to each protest and may reply to any response. Each reply must be received by the Division of Water and Audits within 5 business days after the end of the protest period, and shall be served on the same day to the person who filed the protest or response. If you have not received a reply to your protest within 10 business days, contact California Water Service Company at CALIFORNIA WATER SERVICE COMPANY /s/ Natalie D. Wales Director of Regulatory Policy and Compliance Enclosures cc: Ting-Pong Yuen, ORA

9 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Delevan Intake Pumping/Generating Plant UV 45!!!!!!! Sacramento River!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Moulton Weir Attachment A!!! Tehama-Colusa Canal GCID Main Canal 0 2 Scale in Miles LEGEND Existing Canal County Line New Delevan Pipeline Road 68 New TRR Pipeline!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! New Substation New Pump/Generating Plant Road 69 Existing Paved Road New 110 kv Transmission Line New Recreation Area Glenn Co.!!!!!!!!!!!!!!!!!!!!!!!!!!! Recreation Area East Side Rd!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Colusa Co. Golden Gate Dam Inlet / Outlet Works Colusa Switch Yard TRR Delevan Rd Delevan Diversion / Release Funks Creek 5 Recreation Area Holthouse Reservoir Delevan and TRR Pipeline Sites Reservoir 1.8 MAF Sites Dam Stone Corral Creek Maxwell Sites Rd Maxwell Rd New 110 kv Line Existing WAPA 500 kv Existing WAPA 230 kv Existing PG&E 230 kv Huffmaster Rd Leesville Road to Huffmaster Road

10 Attachment B Sites Project: Frequently Asked Questions The following questions and answers are meant to respond to the most common questions about the Sites project. Q: How would Sites benefit California? A: California operates one of the most extensive and sophisticated water storage and conveyance systems in the world. However, the basic elements of California s water delivery system have remained virtually unchanged for 40 years, while the population of the state has nearly doubled. These facts, coupled with the effects of drought, climate change, and growing environmental and agricultural needs, are putting the system under considerable pressure. Sites Reservoir, as a place to store extra water, provides increased operational flexibility to our water delivery system. Sites is a cost effective way to deal with the growing demands on California water, does not dam an existing river, or require expensive retro-fitting of existing facilities. Sites will provide a needed backstop to help the state s primary water delivery system react to the potential impacts of climate change, which is expected to bring less snow runoff and flashier storms. During drought years, Sites can be refilled from just one or two high flow storm events. For instance, in the drought year of , Sites could have captured 410,000 acre-feet from just two storm events that winter. If Sites were operational this past rainy season, it would have added over one million acre-feet from the El Nino storms. In an average water year, Sites will be able to add 500,000 acre-feet of water to be used by California homes, farms, and businesses, and the ecosystem. During critical dry years, Sites would boost water available to California during the summer by an estimated 250,000 to 300,000 additional acre-feet. FOR MORE INFORMATION: As an offstream storage project, Sites will increase environmental flows for fish while providing much needed operational flexibility to deliver water for consumptive and economic uses. In addition, hydroelectric power generated at Sites during outflows could compensate for fluctuations in wind and solar power generation. PAGE 1 OCTOBER 2016

11 Attachment B FAQs Q: How will Sites benefit the environment? A: Sites is the only proposed storage project that combines the public benefits of water storage with the ecosystem benefits of increased environmental flows in the Sacramento River. Up to half of Sites annual water supplies can be dedicated to environmental flows, which will improve water quality for endangered fish, reduce salinity levels in the Sacramento-San Joaquin Delta (Delta), and enhance Pacific Flyway habitat for migratory birds and other native species. If Sites had been operational in 2015, an additional 240,000 acre-feet of cold water would have been available to support critical salmon migration in the Sacramento River. In dry and critical years, Sites will provide an additional 250,000 to 300,000 acre-feet of coldwater pools to help endangered Salmon populations. Q: How will Sites improve water quality? A: Aside from its ability to store water, Sites provides much needed operational flexibility to California s water system. Sites will be designed to fill during high flow events in the wet season. During these high flow events, Sites will capture water that can then be used during summer months to improve water quality in the Delta when it is at its worst, and provide environmental flows when it is needed most. Q: Under what conditions would Sites divert water? A: Diversions to Sites Reservoir would only be possible if specific criteria are met: 1. After senior water rights holder demands have been met; 2. When Delta flows are in excess according to DWR s operations control office; and 3. If Sacramento River flows at Freeport and Delta diversion locations are greater than the required minimums. Q: How will Sites impact water supply availability? FOR MORE INFORMATION: A: Currently, there are a limited number of reservoirs that hold water above the Delta in Northern California, and they must maintain water quality standards, salinity levels, and environmental habitat protection during dry summer months. The Delta is the state s biggest water bottleneck, home to a rigid (and some argue outdated) system that does not respond well to crisis. Sites would increase North of Delta storage by 23 percent, giving water managers more flexibility to meet the state s water needs while ensuring habitat protection and improving environmental conditions. PAGE 2 OCTOBER 2016

12 Attachment B FAQs Q: Would public money fund Sites? A: Up to 50 percent of Sites may be paid for by California s Proposition 1 Water Bond funding. If the project receives Proposition 1 funding, the money will pay for the public benefits of the project and create a source of water that is specifically earmarked for the environment. In addition, the water provided by Sites will help augment a statewide water system that provides safe drinking water to 25 million Californians, supports a productive agricultural economy, and will make additional environmental water available during critical summer months. Q: If the state funds Sites, would the benefits outweigh the costs? A: Sites is projected to cost $4.4 billion in 2015 dollars. Recent studies of Sites Reservoir estimate that its overall return on investment for the state would be from $61 million to $71 million per year. In addition, outside investment from water districts around the state has increased and the Sites Project Authority has secured committed investors. Although all of the financing aspects are not finalized, the Sites Project Authority has used a conservative cost estimate and fully intends to drive costs down by using alternative delivery methods and potentially a low interest loan program from the federal government. More importantly, when considering a future of scarce water supplies, the benefit of Sites far outweighs the cost. Q: Are dams and reservoirs effective methods of addressing drought? A: Sites Reservoir is a modern solution to California s water challenges. Today, California s water system is extremely rigid and has very little room for error. Sites will provide needed flexibility for the state to respond to future crisis. It will also be the first surface water storage project in California to create a dedicated source of water specifically for public benefit to improve environmental conditions in the Sacramento River and Delta. The unique location of Sites and status as an offstream reservoir will allow it to capture huge storm surges on the Sacramento River and store that water for dry summer months without blocking fish migration or damming an existing river. FOR MORE INFORMATION: PAGE 3 OCTOBER 2016

13 CALIFORNIA WATER SERVICE COMPANY 1720 North First Street, San Jose, CA Revised CPUC Sheet No. XXXXX-W (408) Canceling CPUC Sheet No. XXXXX-W Table of Contents - Page 1 The following listed tariff sheets contain all effective rates and rules affecting the rates and service of the Utility together with information relating thereto: Sheet Subject Matter Service Area Schedule No. CPUC Sheet No. Title Page 5613-W Table of Contents Page 1 Table of Contents XXXXX-W (C) Page 2 Preliminary Statements XXXXX-W (C) Page 3 Preliminary Statements XXXXX-W Page 4 Preliminary Statements XXXXX-W Page 5 Rate Schedules - All Districts XXXXX-W Page 6 Rate Schedules - District Specific XXXXX-W Page 7 Rate Schedules - District Specific XXXXX-W Page 8 Rate Schedules - District Specific XXXXX-W Page 9 Rate Schedules - District Specific XXXXX-W Page 10 Rate Schedules - District Specific XXXXX-W Page 11 Service Area Maps W Page 12 Rules XXXXX-W Page 13 Rules XXXXX-W Page 14 Sample Forms W Page 15 Sample Forms 2926-W (continued) (To be inserted by utility) Issued by (To be inserted by CPUC) Advice Letter No PAUL G. TOWNSLEY Date Filed Decision No. Name Effective Vice President Resolution No. TITLE

14 CALIFORNIA WATER SERVICE COMPANY 1720 North First Street, San Jose, CA Revised CPUC Sheet No. XXXXX-W (408) Canceling CPUC Sheet No. XXXXX-W Table of Contents Page 2 Sheet Subject Matter Service Area Schedule No. CPUC Sheet No. Preliminary Statement AA Preliminary Statement AA Preliminary Statement AB Preliminary Statement AC 8637 Preliminary Statement AD Preliminary Statement AE Page Preliminary Statement AE Page Preliminary Statement AF 9025 Preliminary Statement AG 9032 Preliminary Statement AI Preliminary Statement AJ 9671 Preliminary Statement AK Preliminary Statement AL Preliminary Statement AM Preliminary Statement AN Preliminary Statement AO Preliminary Statement AP Preliminary Statement AQ Preliminary Statement AR Preliminary Statement AS Page Preliminary Statement AS Page Preliminary Statement AT XXXXX-W Preliminary Statement AU XXXXX-W ( N ) Rate Schedules: ALL DISTRICTS Service to Company Employees ED Surcharge to Fund Public Utilities Commission Reimbursement Fee UF Rate Support Fund RSF Low Income Ratepayer Assistance LIRA Low Income Ratepayer Assistance LIRA Low Income Ratepayer Assistance LIRA PBOP Surcharge PB 7049 Additional Surcharges/Surcredits AS Page Additional Surcharges/Surcredits AS Page Additional Surcharges/Surcredits AS Page Additional Surcharges/Surcredits AS Page ANTELOPE VALLEY DISTRICT Residential Metered Service Leona Valley AV-LEO-1-R Nonresidential Metered Service Leona Valley AV-LEO-1-NR Residential Metered Service AV-LAN-1-R Nonresidential Metered Service AV-LAN-1-NR General Metered Service Fremont Valley/Lake Hughes AV-FM Limited Residential Flat Rate Service Lake Hughes AV-LH-2R 2550 Private Fire Protection Service AV BAKERSFIELD DISTRICT Residential Metered Service BK-1-R Nonresidential Metered Service BK-1-NR Residential Flat Rate Service BK-2R Private Fire Protection Service BK Public Fire Hydrant Service BK BAYSHORE DISTRICT Residential Metered Service - South San Francisco Service Area BAY-1-R Nonresidential Metered Service - South San Francisco Service Area BAY-1-NR Private Fire Protection Service BAY (continued) (To be inserted by utility) Issued by (To be inserted by CPUC) Advice Letter No PAUL G. TOWNSLEY Date Filed Decision No. Name Effective Vice President Resolution No. TITLE

15 CALIFORNIA WATER SERVICE COMPANY New CPUC Sheet No North First Street, San Jose, CA (408) CPUC Sheet No. Preliminary Statement (continued) AU. SITES RESERVOIR MEMORANDUM ACCOUNT (SITES MA) ( N ) 1. PURPOSE: The purpose of the Sites Reservoir Memorandum Account (Sites MA) is to track Cal Water's incremental costs associated with the Sites Reservoir Project, a proposal of the Sites Project Authority to develop and make both a water supply and storage capacity available through an off-stream project located on the west side of the Sacramento Valley (approximately 10 miles west of Maxwell). 2. APPLICABILITY: The Sites MA applies to all regulated operations. 3. RATES: The Sites MA has no rate component. 4. ACCOUNTING PROCEDURE: The entries made to the Sites MA may include the following: (a) A debit entry equal to costs (including labor, overhead, operations & maintenance expenses, and capital-related costs including return on investment, income taxes, ad valorem tax, depreciation, and other taxes and fees) that are over and above those that the Commission has approved for recovery through base rates. (b) Balances in the memo account will accrue interest at the 90-day commercial paper rate. 5. REGULATORY PROCEDURE: Disposition of amounts recorded in the Sites MA shall be determined in a general rate case proceeding or according to the Commission's General Order 96-B. ( N ) (To be inserted by utility) Advice Letter No PAUL G. TOWNSLEY Date Filed Decision No. Issued by NAME Vice President TITLE (To be inserted by Cal. P.U.C.) Effective Resolution No. -

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