Scope of the Proceeding

This proceeding will address the following issues:

1. Should the Commission authorize CalAm to implement new Felton District and Monterey District rates ("consolidated rates") based on the combined revenue requirement of those districts?

If yes,

1.(a) Should the combined revenue requirement and rates be adjusted to account for differences between the districts in water supply and other factors, and if so, how?

1.(b) Should the Commission authorize CalAm to establish a new balancing account to track variations between revenues collected from Felton District customers using the new consolidated rates and those revenues that would have been collected by applying the Felton District rates approved but not implemented in D.04-05-023, Ordering Paragraph #6, until the Commission establishes new consolidated rates in Monterey District's Test Year 2006-2008 general rate case? If so, how and from whom should the amounts accrued in this new balancing account eventually be recovered?

If no,

1.(c) What action should the Commission take with respect to the Felton District rates authorized and deferred by D.04-05-023?

2. What action should the Commission take with respect to the deferred revenues accrued in the Felton District balancing account established in D.04-05-023, Ordering Paragraph #6?