2. Background
California Water Service Company (CalWater) is a Class A water utility subject to the jurisdiction of this Commission and distributes water for domestic and industrial purposes in many localities in California.
CalWater filed Application (A.) 10-01-013 (Application) on January 7, 2010, requesting authorization to issue additional debt and equity (New Securities) in the aggregate principal amount of $350,000,000. CalWater states it will use the proceeds of equity securities to fund the retirement of all or a portion of CalWater's then outstanding short-term bank loans, and the balance, if any, for any or all purposes as may be allowed under Section 817. These purposes include: a) water utility plant construction, completion, replacement, extension or improvements of its existing facilities, b) acquisition of property and/or water systems, c) retirement of maturing long-term debt, d) satisfying First Mortgage Bond sinking fund requirements, and e) reimbursement of moneys previously expended from income for which CalWater's treasury has not been reimbursed.
No responses to the Application were received.
In support of its request for authority to issue the debt and equity securities, CalWater's Application includes exhibits and statements2 as required by the following rules:3
a. As required by Rule 2.3 - A balance sheet as of September 30, 2008 and 2009, a pro-forma income statement and return of equity calculation, schedule of capital stock and long-term debt, projected funding for utility plant, estimated cash flow, a summary of issuance of debt and equity authorized in Decision (D.) 04-09-002, a statement of actual and pro-forma capitalization, and a computation of fee statement.4
b. As required by Rule 3.5(a) - A description and the costs of CalWater's property.
c. As required by Rule 3.5(b) - A statement of the amount of stocks and bonds which CalWater desires to issue.
d. As required by Rule 3.5(c) - The purposes for which stocks and bonds will be issued.
e. As required by Rule 3.5 (d) - A description of the obligation or liability assumed by CalWater.
f. As required by Rule 3.5 (e) - A Proxy Statement.
g. As required by Rule 3.5(f) - References and descriptions of the financial instruments defining the terms of the proposed securities.
h. As required by Rule 3.5(g) - A statement that CalWater has no specific plans to retire or exchange securities at this time.
CalWater anticipates issuing equity in the form of common stock and debt securities, including First Mortgage Bonds, Secured Notes, Unsecured Senior Notes, or Tax-Free Bonds to the extent available under the state volume cap.
CalWater requests the maximum degree of flexibility for its decisions as to the timing, size and terms of the debt offerings(s).
CalWater requests exemption from the Commission's Competitive Bidding Rule with respect to debt securities similar to the exemption provided in
D.09-03-038.5
No responses to the Application were received.
On May 14, 2010, an assigned Administrative Law Judge's (ALJ) ruling requested information from CalWater. CalWater responded on May 28, 2010.
On June 11, 2010 and June 22, 2010, ALJ rulings requested additional information from CalWater. CalWater responded to the rulings on June 18, 2010 (June 18 Response), and July 2, 2010 (July 2 Response), respectively.6
This proceeding was submitted on July 2, 2010.
2 See Application at 4-9.
3 All references to Rules are to the Commission's Rules of Practice and Procedure.
4 The fee computation is discussed below in Section 10.
5 D.09-03-038 (Ordering Paragraph 1) provided that CalWater was exempt from the competitive bidding rule to the extent that no one series of debt issuance exceeds
$20 million and/or no one purchaser is permitted to acquire from CalWater more than $20 million in debt in a calendar year.
6 All ALJ Rulings and CalWater's responses are included in the correspondence file.
