BRECA Steering Committee Meeting Minutes 2-28-17


DATE: February 28, 2017
PLACE:  Rancho Cordova Library, 9845 Folsom Blvd., Sacramento, California
MEETING TYPE:  BRECA Steering Committee Meeting


Lori Christensen
Kelly Cohen
Bonnie Domeny
Rene Hamlin
Lynda Hammitt
Gay Jones
Jim Morgan


Jay Domeny
Andrea White

  1. Call to Order by Chair Rene Hamlin
  2. California American Water Proposed Rate Increase: Presentation by Office of Ratepayer Advocates
    Richard Rauschmeier and other staff from the California Public Utilities Commission (CPUC) Office of Ratepayer Advocates (ORA) gave a lengthy presentation on the California American Water (Cal Am) 2018 General Rate Case.  Mr. Rauschmeier stated that the Cal Am General Rate Case application is about 20,000 pages long.  The ORA has technical staff who review the application and make recommendations to the CPUC regarding the application.  The ORA is statutorily mandated to recommend the lowest rates consistent with safe and reliable service.Mr. Rauschmeier stated that the basic rate making equation is that revenue requirements equals expenses plus taxes plus (rate of return times rate base).  The maximum allowed rate of return is 8.341%, and the “rate base” is the book value of the physical plant.  If forecasted revenue is below revenue requirements, then there will be a rate increase.

    A question was posed about the effect of the drought.  Mr. Rauschmeier stated that utilities’ costs are typically about 70% fixed, and 30% variable (i.e. depend on how much water is used).  However, state policy is to encourage conservation, which is encouraged by having more of the charges allocated to how much water is used.  He stated that he thinks that Cal Am has about 30% fixed charges and 70% variable.  In this case, if less water is used, there may be a need for a rate increase to cover the fixed costs.  However, this does not necessarily mean that the customers will pay more, since less water is being used.  He also clarified that the rate of return is actually an “opportunity” to make a profit, and that if unusual events occur, the rate of return may be less.

    Another factor is increasing use of surcharges (memoranda or balancing accounts).  For example, the Water Rate Adjustment Mechanism (WRAM) allows the utility to recoup revenues that were lost in previous years due to reduced water use.  This effectively decouples revenue from water use.  If the traditional relation of sales to profits existed, then the utility would have an incentive to maximize water use.  A question was posed as to whether the ORA could help BRECA with language opposing the WRAM.  Mr. Rauschmeier responded that he would advocate a broader approach, opposing memoranda and balancing accounts in general.

    Turning to the specific Cal Am rate case, Mr. Rauschmeier stated that Cal Am is asking for a 27.29% increase, but the ORA is recommending a 10.31% increase.

    Mr. Rauschmeier also addressed the proposed consolidation of the Sacramento District with the Larkfield district.  He presented a bar graph that indicated that the average cost of water for the Sacramento District is about $5 per hundred cubic feet ($5/ccf), whereas the cost of water for the Larkfield District is about $10/ccf.  A weighted average for consolidation would be about $5.5/ccf.  However, in general, larger districts have economies of scale, so the ORA’s view is that the consolidated cost should be lower.  He also pointed out that the Sacramento District actually consists of 9 systems that are not connected, so it already has cost consolidation.  He also stated that “risk pooling” is an advantage.  For example, the Sacramento District has an upcoming problem due to new regulations for chromium contamination, but the Larkfield District does not.  Finally, there is a state policy concerning a “human right” to water, which implies pooling costs.

    Mr. Rauschmeier reviewed a number of special requests that are part of the Cal Am request.  Special request number 5 concerns the WRAM.  The CPUC has imposed a 10% cap on the WRAM fees.  Cal Am is requesting removal of the cap.  The ORA is recommending retaining the cap.

    A question was posed as to how the ORA would respond to the BRECA letter on the Cal Am rate case.  Mr. Rauschmeier stated that the ORA does not respond to letters on the rate case, but may incorporate issues into ORA testimony.  He also stated that there is nothing preventing BRECA from submitting additional comments.

  1. Minutes of January 24, 2017
    Several revisions were requested to the draft minutes for January 24, 2017, which were accepted.  Gay Jones made a motion to adopt the revised draft minutes.  Bonnie Domeny seconded the motion.  The motion was approved unanimously.
  1. Agenda Items from the Community
    1. Expansion of Dog Leash Laws
      Lynda Hammitt stated that this item came from Nextdoor, and was a request for tougher dog leash laws.  A member of the community stated that she lives next to the levee, and sees people walking dogs without a leash all the time.  She has been approached by large dogs.  Bonnie Domeny commented that the laws are there, but enforcement is the issue.  Jim Morgan commented that on the Parkway and levee, leash laws are enforced by Park Rangers.  But, there are many off-leash dogs, and few rangers on duty at any given time.  Kelly Cohen pointed out that there is a reporting system for problems on the Parks website.  Gay Jones stated that there are three things a person can do: call 311 with the county, report to the Parks website on the “oak leaf,” or Kelly and Gay attend the American River Parkway Coalition meetings, and they can convey problems to Parks Rangers.  Generally they want to know when and where, and what kind of dog, or have a picture.
  1. Reports
    1. Finance
      There was no financial report.
    2. CORPAC
      Carmen Mitchell reported that the Cordova Community Planning and Advisory Council (CORPAC) meeting this month received a proposal to allow a person in Rosemont with a one acre lot to build “in-law” quarters, which was approved.

      1. West Jackson Highway Master Plan
        Terry Dugan, President of the Rosemont Community Association stated that they are concerned about the West Jackson Highway Master Plan and other large developments proposed along Jackson Highway.  He stated that he does not want us to become an orphan in the county.  He suggested that we should have a conversation on options.  He suggested three options: do nothing, join an adjacent city, or form our own city.Gay Jones stated that there is a Notice Of Preparation (NOP) for a Draft Environmental Impact Report (DEIR) on the West Jackson Highway Master Plan, and asked if BRECA should comment.  Jim Morgan stated BRECA had received the NOP, and that there is a deadline for comments, 30 days after receipt of the NOP.  There was consensus that traffic is an issue, and that Gay Jones and Jim Morgan would lead in sending a comment letter on the NOP.
    3. Outreach Committee
      Lynda Hammitt reported that she had loaded the existing membership application form on Nextdoor, and is working on getting it on the BRECA website.  She is working on a membership appeal, and needs help with graphics.  Lori Christensen wrote a draft “accomplishments” list, and asked for feedback.  Rene Hamlin suggested that adopted a mile of Parkway should be added.  Lynda Hammitt stated that they have set a goal of 10 new members by March 31, and they have 9 to go.  She challenged each Steering Committee member to recruit one new member.
  1. Old Business
    1. By-Laws
      Jim Morgan stated that the By-Laws election had been completed.  There were 49 responses, with 46 Yes votes and 3 No votes.  So, the new By-Laws have been adopted.
  1. New Business
    1. From the Floor
      Lori Christensen reminded people that the Annual Meeting is coming up in April.  We need to think about who to invite as speakers.  Bonnie Domeny suggested the new Problem Oriented Policing (POP) officer, and code enforcement.  Sheriffs, and the Park Director and/or Ranger were suggested.  It was agreed that Rene Hamlin, Bonnie Domeny, and Melissa Schuler would work on the Annual Meeting.
  1. Meeting adjourned.

The next meeting will be a Steering Committee Meeting on Tuesday, March 28, 2017, at the Rancho Cordova Library.

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