Coalition for Equitable Water Rates

CEWR
Update on Water Rate Protest
December 8, 2011

What CEWR has accomplished . . .

Filed expert testimony with the ALJ that challenged CLWSCs rate increase request in 3 major areas.
CLWSC Revised Request
Net rate base CLWSC earns revenue from return on amount of capital it has invested and put at risk.

CEWR Recommended

Difference

$40,962,975

$29,983,199

($10,979,776)

Revenue requirement Revenue from ratepayers to support CLWSC earning a fair and reasonable profit as defined by the Texas Water Statute.

$12,657,271

$9,474,898

($ 3,182,373)

Increase in water tariff rates (costs) to the ratepayers.

71%

21% or less

(50%)

Our review discovered . . .

- Value of Canyon Lake assets is overstated by ~ $5.6M in rate request.
Pre-Acquisition Assets Estimated NBV of Assets as of June 30,2006, Based on Application Stated Values Purchase Price Paid for Assets Claimed NBV Above Purchase Price Claimed NBV Above Purchase Price Percentage Per Application $ 22,148,722 $ 16,523,000

$ 5,625,722 34%

- Overstated book values & annual

depreciation expense claimed by Canyon Lake for these subdivisions is ~ $3.4M in rate base.

Subdivisions with Zero Connections Avonlea First Mountain Subdivision Fischer Heiser Hollow Potter Creek Rayner Ranch Subdivision Rivermont Startzville The Legends Valley View

- Canyon Lake has claimed $578,090 in corporate overhead transactions (allocations) to San Jose Water. Canyon Lake has not shown that the services that are provided through these affiliate transactions are not duplicative.
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CEWR Testimony Summary

CLWSC Request Original Application, August 2010 Net Rate Base Rate of Return on Rate Base Return $ $ 41,550,802 8.67% 3,603,738 $ Revised May 2011 $ 40,962,975 8.67% 3,552,756 $ $ CEWR Testimony, October 31, 2011

Adjustments
(10,979,777) -0.83% (1,202,073)

Recommended Amounts $ $ 29,983,199 7.84% 2,350,683

Revenue Requirement Operating expenses Depreciation expense Income tax expense Return Total revenue requirement Other revenues Test year revenues Revenue Increase - $ $ $ $ 5,664,627 2,195,074 1,121,828 3,603,738 12,585,268 (1,017,161) (6,899,243) 4,668,864 $ $ $ 5,809,379 2,174,800 1,120,336 3,552,756 12,657,271 (1,124,163) (6,899,243) 4,633,865 $ $ $ (892,182) (642,432) (445,686) (1,202,073) (3,182,373) ___-___ (3,182,373) $ $ $ 4,917,197 1,532,368 674,650 2,350,683 9,474,898 (1,124,163) (6,899,243)

1,451,492

What is still at stake . . .

CLWSC* residential water rate filing requested 71% increase:

---- PROPOSED Rate

MINIMUM MONTHLY CHARGE (0 gallons)

PRIOR to Oct 27,10 $45.29

PHASE I (Now) $62.50

PHASE II (Postponed) $77.38

METERSIZE 3/4
10,000 GALLONS USED (3/4 Meter)

- First 4,000 Gallons - Next 6,000 Gallons

$ 13.20 ($3.30) $ 21.60 ($3.60)

$18.20 ($4.55) $29.82 ($4.97)

$22.56 ($5.64) $36.96 ($6.15)

Total Monthly Bill

$ 80.09

$110.52

$136.90

. . . ~ a $600+ increase in your yearly water bill.

*Source: Canyon Lake Water Service Company, PO Box 742, Canyon Lake, Texas 78133.Selected data.
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Critical Upcoming Events . . .

December 30, 2011 March 26-30, 2012 June/July 2012 Oct/Nov 2012

Executive Director TCEQ files testimony Hearing on the merits before the ALJ ALJ opinion to TCEQ Commissioners Final rate order by TCEQ Commissioners

Settlement negotiations with CLWSC on going throughout to accelerate final decision and reduce cost to all parties
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CEWR invested your donations. . .

Final Rate Hearing Expenses

$25,000
19.3% 3.2% 6.0% 3.2%

CEWR Money Utilization To-Date (Nov 11)

$25,000

49.1%

22.3%

. . . to win fair & reasonable water rates for all of us.

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CEWR has developed the evidence. . .

Donate to help finish the protest

$25K

Associations provided group donations - $1,000 or more Individual Donations can make the difference

Schedule CEWR updates for your Community Meetings.

Associations, civic and community groups, business groups.

. . . but we cant win without additional funds to support our work for every water user.
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What you can do . . .

Champion your Associations donation of $1,000 or more. - Use end of year budget $$$ - Add into 12 budget, donate by end of Feb 12

Help update and inform all friends of the facts of the case.

. . . commit to finishing & winning this fight.

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