3. Settlement Agreements

There were two settlement agreements in this proceeding, a partial results of operations agreement and an all-party rate design agreement. These settlement agreements are attached to the decision as Appendices B and C, respectively.

The partial settlement agreement, filed on August 19, 2009 as amended on August 26, 2009, resulted in SJWC reducing its requested 2010 test year net operating revenue by $481,000 to $37,401,000 from $37,882,000 and its rate base by $5,676,000 to $425,010,000 from $430,686,000. DRA increased its recommended 2010 test year net operating revenue by $389,000 to $33,355,000 from $32,966,000 and rate base by $7,749,000 to $378,984,000 from $371,235,000.

These revised test year estimates resulted from a review of initial positions, correction of errors, and a better understanding of the other party's estimates. Many of those agreements stemmed from the availability of more recent data to DRA after SJWC filed its application.

An all-party rate design settlement agreement was attached to the partial results of operations settlement agreement filed on August 19, 2009. The only changes to SJWC's rate design, which is consistent with the Commission's D.86-05-064 rate design policy, pertained to SJWC's Mountain District. This agreement resolved all of the issues raised by the Mutual Water Companies and the Redwood Estates Services Association obtaining water service in SJWC's Mountain District. Under the terms of the settlement agreement, Mountain District customers would pay the same service charges in effect for all of SJWC's remaining customers. It also provided for an increase in the current water use restriction to 500 gallons per day per service from 400 gallons and established an Interruptible Service Clause tariff.

Upon careful analysis of the record and consideration of reasons for the parties' initial and revised estimates and rate design, we find that the partial results of operations and all-party rate design settlement agreements are a reasonable resolution of the issues, consistent with the law, and in the public interest. Pursuant to Rule 12.5 of the Commission's Rules of Practice and Procedure (Rules), the adoption of these settlement agreements does not constitute approval of any principle or issue in this proceeding and should not be cited as precedent in any future proceeding.