8. The Fine is Reasonable

Golden State unreasonably withheld information from the Commission when it failed to inform the Commission of the internal control failures and the resultant problems with Richardson Engineering Company. The settling parties agreed on a fine of $1,000,000. At the maximum rate of $20,000 per occurrence, this equates to a minimum 50 serious violations, and as many as 2,000 more minor violations at the minimum fine of $500 per occurrence, as permitted by Pub. Util. Code § 2111.

Every corporation or person, other than a public utility and its officers, agents, or employees, which or who knowingly violates or fails to comply with, or procures, aids or abets any violation of any provision of the Constitution of this state relating to public utilities or of this part, or fails to comply with any part of any order, decision, rule, direction, demand, or requirement of the commission, or who procures, aids, or abets any public utility in such violation or noncompliance, in a case in which a penalty has not otherwise been provided for such corporation or person, is subject to a penalty of not less than five hundred dollars ($500), nor more than twenty thousand dollars ($20,000) for each offense.

The violations here would be Water & Audits' assertions of Golden State's failure to disclose the problems with Richardson Engineering Company and would include the continued inclusion of unreasonable costs in rates when Golden State knew these costs to be problematic. In § 6.4 of the proposed settlement Golden State and Water & Audits agree that the $1,000,000 fine resolves the question of a duty to inform the Commission. In joint comments on the proposed decision, the settling parties point out that "Section 5 of the Settlement makes clear that Golden State only agreed that, for purposes of this Settlement, as a consequence of its failure to disclose the Richardson Engineering Company matter to the Commission, ratepayers were exposed to unjust and unreasonable costs in the their water rates." (Joint Comments at 5 - 6.) Pursuant to the settlement the fine will be paid to the general fund of the State of California.

This is a substantial fine in both absolute terms and in relation to the refunds and other rate adjustments included in the settlement. We find that it is in the public interest to accept the settlement's proposed fine.