ALJ/BMD/jyc Date of Issuance 9/29/2010

Decision 10-09-026 September 23, 2010

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of CALIFORNIA WATER SERVICE COMPANY, (U60W), a California corporation, for an order to issue and sell additional debt and equity securities not exceeding the aggregate amount of $350,000,000 and other related requests.

Application 10-01-013 (Filed January 7, 2010)

DECISION AUTHORIZING CALIFORNIA WATER SERVICE COMPANY TO ISSUE DEBT AND EQUITY SECURITIES

TABLE OF CONTENTS

Title Page

DECISION AUTHORIZING CALIFORNIA WATER SERVICE COMPANY TO ISSUE DEBT AND EQUITY SECURITIES 22

1. Summary 22

2. Background 33

3. Discussion 55

A. Issuance of Equity Securities 55

B. Issuance of Debt Securities 66

4. Competitive Bidding Rule 77

5. Authorization for Refinancing Accounting 88

6. The Existing Unsecured Line of Credit Does Not Require
Commission Authorization 99

7. CalWater's Request to Extend Short-Term Financings to Terms
up to 24 Months 1010

8. Short Term Debt Limited to 12-Month Term Except for
Commission Authorization 1111

9. Financial Information 1414

Capitalization and Liabilities 1414

Construction Budget 1515

Estimated Cash Flow and External Financing 1616

Projected Cash Received 1717

Capital Ratios 1818

10. Fees 1818

11. Reporting Requirement 1919

12. California Environment of Quality Act (CEQA) 1919

13. Comments on Proposed Decision 2020

14. Assignment of Proceeding 2020

Findings of Fact 2020

Conclusions of Law 2222

ORDER 2424

DECISION AUTHORIZING CALIFORNIA WATER SERVICE COMPANY TO ISSUE DEBT AND EQUITY SECURITIES

1. Summary

This decision grants the application of California Water Service Company (CalWater), pursuant to Sections 816 through 830, and 851 of the California Public Utilities Code,¹ to:

1. Issue additional debt and equity securities of up to $350 million in aggregate for purposes described in Sections 817(a) through (h) (inclusive). These purposes primarily include property acquisition, construction, completion, extension or improvement of facilities. Other purposes described in Section 817 include refunding obligations, retiring other securities, reimbursement of the treasury or reorganization of its capitalization or indebtedness.

2. Be exempted from the Commission's Competitive Bidding Rule in relation to the sale of debt.

3. Amortize any discount, expense, or premium associated with the issuance or redemption of its long-term obligations before the date of maturity of the first issue ratably over the remaining life of the replacement obligation.

This decision also finds that CalWater's existing unsecured line of credit results in only short-term obligations and so does not require Commission authorization as long-term debt.

CalWater's request to modify the provisions of its unsecured line of credit in its Credit Agreement to allow the use of the credit facility for terms up to
24 months is denied without prejudice.

The authority granted is subject to the conditions specified below. Application 10-01-013 is closed.

¹ All statutory references are to the Pub. Util. Code unless otherwise noted.