Application of California-American Water Company for Authorization to Modify Conservation and Rationing Rules, Rate Design, and Other Related Issues for the Monterey District

Analysis Group was retained by the California-American Water Company (Cal-Am) – an investor-owned utility providing residential water service to nearly 700,000 customers in California, including Monterey and several neighboring communities – in a matter before the California Public Utilities Commission (CPUC). Cal-Am was accused of mismanaging the conservation allotment feature of its water rates; conservation allotments were intended to both encourage conservation and provide customers with an equitable allotment of water for essential household use. Regulatory Liaisons (RL), an independent intervenor in the proceedings, argued that Cal-Am gave some residential customers more conservation allotments than they should have received and that, as a consequence, some Cal-Am Monterey customers were overcharged. RL sought a fine of as much as $310 million.

Analysis Group Senior Advisor David Sosa, supported by a team led by Manager Tracy Danner, submitted testimony on Cal-Am's behalf. Dr. Sosa opined that RL's population estimate for Cal-Am's service territory was biased and unreliable and critiqued analyses from RL regarding the effect of the allegedly incorrect allotments on Monterey customers' rates. Dr. Sosa also opined that RL had failed to present evidence that customers had been harmed by the allegedly defective allotment system and that its damages calculations were misleading.

Administrative Law Judge Gary Weatherford agreed, finding that RL's claims were based on flawed methodologies, and were confusing and not credible. ALJ Weatherford accepted Cal-Am's proposed settlement agreement, finding that the agreement's provisions – which included a $500,000 return to ratepayers and measures to review its rates and provide more information to customers – were reasonable in light of the whole record, consistent with law, and in the public interest.