7. Discussion

We are persuaded that Cal-Am must pursue a reasonable and feasible course of action to obtain a potable water supply in a timeframe that will allow Cal-Am to comply with the Cease and Desist Order. Cal-Am is obligated under various statutory frameworks to provide water to its customers. Pursuant to Pub. Util. Code § 8201, "Any water company having a franchise to use the streets of a city, shall properly and adequately serve with water the inhabitants of the territory for the service of which it has such franchise. As used in this section, to `properly and adequately serve with water' includes furnishing water of a quality meeting or exceeding standards established by the State Department of Health pursuant to Section 4026 of the Health and Safety Code." In pertinent part,
Pub. Util. Code § 451 requires "Every public utility shall furnish and maintain such adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities . . . as are necessary to promote the safety, health, comfort, and convenience of its patrons, employees, and the public."

It is unfortunate that Cal-Am withdrew its support for the Regional Desalination Project, but given the various events that have overtaken the decisions we reached in December 2010, we see no alternative but to move forward with the new application, A.12-04-019, seeking the Monterey Peninsula Water Supply Project. At this point, there is simply too much uncertainty associated with the Regional Desalination Project to force Cal-Am to pursue that project further. It is not reasonable to allow time to continue to elapse and costs to continue to accrue for the Regional Desalination Project, a project that, due to a significant change in circumstances since 2010, has no reasonable prospect of achieving its goals. In terms of the many requirements necessary to ensure that a reasonable water supply source is in place by December 2016, there is no time to lose, as Cal-Am has pointed out.

We decline to address here positions being taken by parties concerning rights and obligations under the Water Purchase Agreement. MCWD's related contentions and requests will not be dealt with here. We are not inclined to address alleged or potential breaches of contracts.

This proceeding has been open since 2004. The assigned Commissioner and ALJ had anticipated that Phase 3 would be required to deal with cost allocation and rate design related to the Regional Desalination Project. Because Cal-Am has put forth a new proposal in A.12-04-019, we need not address cost allocation and rate design here. Therefore, we close this proceeding.