3. Historical Background - D.85-06-132 and D.93-03-03

In the 1985 decision, the Commission authorized Cal Water to purchase the water system of the Wesmilton Water Company for $100,000 and to commence providing water service in Wesmilton's former service territory. The Commission noted that Wesmilton's water sources, three wells, were all polluted with dibromochloropane and that Cal Water could provide safe and potable water.

The Commission also noted that in addition to the $100,000 paid by Cal Water, a real estate developer with property in the Wesmilton service territory, Nelson, had paid $65,000 to induce the then-owner of the Wesmilton Water Company to sell the water system to Cal Water. The Commission found that Nelson made the payment because he would benefit from the transfer of Wesmilton to Cal Water by obtaining "water for his impending development more economically if [the transfer] is approved."³

As set forth in a staff report quoted in the decision, the owner of Trend Homes, another real estate development located in the Wesmilton service territory, had initially agreed to fund $40,000 of the extra $65,000 but subsequently decided not to make a contribution, and so Nelson provided the entire $65,000. Based on an "understanding" with the Commission's staff, the application for the transfer of Wesmilton also included a request that the Commission require Cal Water both to collect $40,000 from the developer of the Trend Homes property prior to providing water service to that development and to immediately pass on the payment to Nelson.

In D.85-06-132, the Commission declined to adjudicate the Nelson reimbursement request due to "significant problems," noting that neither Trend Homes nor John Bonadelle was a party to the proceeding.⁴ Instead, the Commission directed Cal Water to file an Advice Letter with additional information "if and when the developers of the property now owned by Trend Homes apply for water service."⁵ The Commission further directed that the Advice Letter be reviewed by Commission Staff (at the time, the Evaluation and Compliance Division), which would make "whatever recommendation it deems appropriate for further Commission action on this issue."⁶

On August 14, 1992, Nelson petitioned to modify D.85-06-132, to impose a repayment obligation on all customers in the former Wesmilton service territory. The Commission denied the petition for modification in D.93-03-038 and made no changes to the 1985 decision.

³ See D.85-06-132, mimeo. at 8, Finding of Fact 7.

⁴ See D.85-06-132, mimeo. at 4.

⁵ Id. at 5.

⁶ Id.