ALJ/SMW/hkr Date of Issuance 7/12/2010

Decision 10-07-004 July 8, 2010

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of California-American Water Company (U210W) (1) to issue, sell and deliver not exceeding in the aggregate $85 million of debt securities consisting of long-term notes; and (2) exempting the issuance, sale and delivery of such debt securities from the Commission's competitive bidding rule.

Application 10-03-024 (Filed March 10, 2010)

DECISION AUTHORIZING CALIFORNIA-AMERICAN WATER COMPANY
TO ISSUE UP TO $85 MILLION OF NEW LONG-TERM DEBT SECURITIES

TABLE OF CONTENTS

Title Page

DECISION AUTHORIZING CALIFORNIA-AMERICAN WATER COMPANY TO ISSUE UP TO $85 MILLION OF NEW LONG-TERM DEBT SECURITIES 22

1. Summary 22

2. Background 22

3. Request 33

4. Discussion 55

4.1. Public Utilities Code Requirements for Issuance of Securities 55

4.2. Forecast of Sources and Uses 66

4.3. Tax-Exempt Financing and Encumbrance of Assets 88

4.4. Financial Services Agreement 99

5. Competitive Bidding Rule 99

6. Affiliate Transaction Rules 1111

7. Reporting Requirement 1212

8. Fee 1212

9. Financial Information 1313

10. California Environmental Quality Act 1313

11. Expiration of Authority 1515

12. Category and Need for Hearings 1515

13. Comments on Proposed Decision 1515

14. Assignment of Proceeding 1515

Findings of Fact 1515

Conclusions of Law 1717

ORDER 1919

DECISION AUTHORIZING CALIFORNIA-AMERICAN WATER COMPANY
TO ISSUE UP TO $85 MILLION OF NEW LONG-TERM DEBT SECURITIES

1. Summary

This decision grants California-American Water Company (Cal Am) the authority to issue up to $85 million of long-term Debt Securities either through its affiliate American Water Capital Corporation, pursuant to its Financial Services Agreement dated June 15, 2000, or directly with a governmental entity. This decision also authorizes Cal Am to: 1) encumber utility property subject to the conditions enumerated in orders of this decision; 2) exempt the issuance of Debt Securities authorized herein from the Commission's Competitive Bidding Rule; and 3) report all Debt Securities information required by General Order 24-B to the Commission on a quarterly basis.