11. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and Gary Weatherford is the assigned ALJ in this proceeding.

1. Pursuant to the State Water Resource Control Board's Cease and Desist Order, Cal-Am must cease diverting water from the Carmel River by the end of December 2016 and must replace 7,062 acre-feet of water, or face severe restrictions.

2. On October 14, 2011, Cal-Am filed a petition for clarification and modification of D.10-12-016, requesting confirmation that the Cal-Am only facilities (absent the transfer pipeline) would still be required for any project built and that such facilities should continue to be designated as used and useful for ratemaking purposes. On April 23, 2012, Cal-Am withdrew that petition, and filed a new application, mooting those requests.

3. Cal-Am has withdrawn its support for the Regional Desalination Project, approved in D.10-12-016.

4. While various strategies may be employed to replace the water, time is of the essence to ensure that a water supply is in place to avoid the restrictions associated with the State Water Resource Control Board's Cease and Desist Order.

5. On April 23, 2012, Cal-Am filed A.12-04-019 to propose how to move forward to provide sufficient water supply to comply with the State Water Resource Control Board's Cease and Desist Order and to avoid the stringent water supply reductions ordered by the Cease and Desist Order.

6. To date, we have approved $26,568,651 for recovery of pre-construction costs related to the Coastal Water Project.

7. In A.11-06-030, Cal-Am is seeking an additional $5,354,229 in
pre-construction costs accrued in 2010.

8. Cal-Am has recovered $14,426,284 from its customers thus far via Special Request Surcharge I.

9. There are additional costs, which may be in dispute, related to the MCWD and MCWRA, the Reimbursement Agreement approved in D.10-08-008, and the Line of Credit approved in the Water Purchase Agreement.

1. It would not be reasonable to approve Cal-Am's Petition to Modify
D.10-12-016 without fully determining how the Cal-Am facilities would relate to the project ultimately determined to replace the Regional Desalination Project; therefore, it is reasonable to accept Cal-Am's April 23, 2012 withdrawal of that petition.

2. Given the uncertainty surrounding CEQA, financing, and the ability to obtain permits for the Regional Desalination Project, it is not reasonable to force Cal-Am to pursue the Regional Desalination Project.

3. Cal-Am is obligated to furnish adequate and safe water to its customers, pursuant to various statutory mandates, including, but not limited to, Pub. Util. Code §§ 451 and 8201.

4. Because we are closing this proceeding, there is no need to consider
Phase 3 of this proceeding, related to cost allocation and rate design at this time.

5. Public Trust Alliance is an active party in this proceeding, a signatory to the Settlement Agreement approved in D.10-12-016, and its motion for leave to file late response to the individual status reports should be granted.

6. Because we are closing A.04-09-019, it is reasonable to determine that pending motions not addressed herein are moot and to deny as premature any requests for determination of eligibility of intervenor compensation status.

7. To the extent that there are disputed costs related to the Reimbursement Agreement or the Line of Credit under the Water Purchase Agreement, Cal-Am should file a new application.

8. Today's decision should be made effective immediately.

ORDER

IT IS ORDERED that:

1. California-American Water Company's April 23, 2012 withdrawal of its Petition for Clarification and Modification of Decision 10-12-016 filed on
October 14, 2011, is treated as a motion and granted.

2. California-American Water Company shall file a new application to the extent that there are disputed costs related to the Reimbursement Agreement or the Line of Credit under the Water Purchase Agreement. However, the Division of Water and Audits should continue processing all currently unprocessed Advice Letters dealing with rate base offsets for California-American Water Company only facilities discussed in Decision (D.) 10-12-016.
California-American Water Company should not claim any costs incurred for the California-American Water Company-only facilities after January 17, 2012, the date California-American Water Company announced its withdrawal from the Regional Desalination Project, in connection with the authorization in
D.10-12-016. The recoverability of costs that have been incurred in
Application (A.) 04-09-019 related to the Regional Desalination Project will be examined in other proceedings. Nothing herein is intended to prevent California-American Water Company from incurring reasonable costs related to its current application A.12-04-019, nor does it limit any more general authorization California-American Water Company received prior to the selection of the Regional Desalination Project.

3. Public Trust Alliance's March 20, 2012, motion for leave to file a late response to the various status reports filed on March 1, 2012, is granted.

4. Water Plus's February 13, 2012, notice of intent to claim intervenor compensation is denied.

5. LandWatch Monterey's April 2, 2012, motion for party status and for leave to file a notice of intent to claim intervenor compensation is denied.

6. Coalition of Peninsula Businesses' April 23, 2012, motion for party status is denied.

7. Any pending motion or request not addressed herein is denied.

8. Application 04-09-019 is closed.

This order is effective today.

Dated July 12, 2012, at San Francisco, California.

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