4. Discussion of Application

In a GRC proceeding, the Commission undertakes a comprehensive review of Great Oaks every three years, as prescribed in our Rate Case Plan. Based on the results of operations we authorize here, and using the cost of capital we authorize in A.09-05-007, the Commission will adopt a revenue requirement for Great Oaks' fiscal test year July 1, 2010-June 30, 2011, as well as fiscal years 2011/2012 and 2012/2013.

We will also establish a specific rate design to collect the authorized revenue requirement and from this adopt final rates for all customer classes. We address the establishment, discontinuance, or continuation of balancing and memorandum accounts and provide for all other tracking, monitoring, and reporting deemed necessary in the GRC period. In addition, based on final rates adopted in this proceeding, a surcharge or surcredit will be imposed to recover or refund the difference between the new adopted GRC rates and the rates collected since September 1, 2009 under the interim rate authorization of AL 196C-W.

As set forth in the Rate Case Plan , Great Oaks "bears the burden of proving that its proposed rate increase is justified and must include in the proposed application and supporting testimony, all information and analysis necessary to meet this burden."¹⁴

As part of this GRC, the Commission also examines the utility's water quality and makes specific findings and recommendations concerning the utility's water quality compliance.¹⁵ As summarized in DRA's Report, Great Oaks' water system consists of fifteen active and 5 standby wells and 5 storage tanks. These wells are permitted by the California Department of Public Health (CDPH) and the water system is routinely inspected and water samples tested by CDPH. DRA reviewed the information provided by Great Oaks and also contacted CDPH. The record reflects that Great Oaks system was last inspected in July 2009 and that between 2006 and September 2009 Great Oaks has been in compliance with all the State primary drinking water standards and does not have any violations.¹⁶

Therefore, based on the information in our record, we find that Great Oaks' water system and water quality are in compliance with the requirements of CDPH.

¹⁴ See D.07-05-062, issued May 24, 2007, mimeo. at Appendix A at A-6.

¹⁵ In Hartwell Corp. v. Superior Court, 27 Cal.4^th 256 (2002), the California Supreme Court held that the Commission has constitutional and statutory responsibilities to ensure that water utilities provide water that protects the public health and safety. For the scope of our water quality review in a GRC, see D.07-03-062, mimeo. at 24-26.

¹⁶ Exhibit 16 at Chapter 12.