ALJ/GW2/eam/ms6 Date of Issuance 7/18/2012

Decision 12-07-008 July 12, 2012

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of California-American Water Company (U210W) for a Certificate of Public Convenience and Necessity to Construct and Operate its Coastal Water Project to Resolve the Long-Term Water Supply Deficit in its Monterey District and to Recover All Present and Future Costs in Connection Therewith in Rates.

Application 04-09-019 (Filed September 20, 2004; amended July 14, 2005)

DECISION GRANTING MOTION TO WITHDRAW PETITION
TO MODIFY DECISION 10-12-016 AND CLOSING PROCEEDING

1. Summary

By this decision, we resolve pending motions and close the proceeding in California-American Water Company's (Cal-Am) Application (A.) 04-09-019. Cal-Am notified parties on January 28, 2012, after months of mediation with the Marina Coast Water District (MCWD) and the Monterey County Water Resources Agency (MCWRA), of its conclusion that continued pursuit of the Regional Desalination Project approved by Decision (D.) 10-12-016 was not reasonable and that alternative desalination projects were under consideration. On April 23, 2012, Cal-Am filed both a withdrawal of its petition for clarification of D.10-12-016 and a new application, A.12-04-019, for approval of the Monterey Peninsula Water Supply Project. The Commission is treating the withdrawal as a motion to withdraw, and granting it.

Until now, A.04-09-019 has remained open to consider rate base offsets for Cal-Am only facilities and a Phase 3, related to cost allocation and rate design. By this decision, those matters will be considered instead in a separate proceeding. The Commission is treating the new application, A.12-04-019, as a replacement for the previous one, A.04-09-019.¹ Cal-Am is instructed to file a separate application to deal with disputed and undisputed costs, and associated cost recovery, relative to A.04-09-019. However, the Division of Water and Audits should continue processing all currently unprocessed Advice Letters dealing with rate base offsets for Cal-Am only facilities discussed in D.10-12-016. Cal-Am should not claim any costs incurred after January 17, 2012, the date
Cal-Am announced its withdrawal from the Regional Desalination Project.
In due course the Commission will consider any modifications that may be advisable in D.10-12-016 to have it conform with the decision here.

¹ MCWD is requesting that we determine that "project cessation," within the meaning of the Water Purchase Agreement (WPA), has occurred with regards to the Regional Desalination Project. Under the WPA (e.g., subsection 7.4), project cessation is a condition triggering certain rights and duties between Cal-Am, MCWD and MCWRA. We refrain from making a finding of "project cessation" here because the jurisdiction to resolve claims or causes of action under the WPA appears to lie with the judiciary rather than the Commission. What we do find is that Cal-Am has withdrawn its support of and role in the Regional Desalination Project; and, further, we consider
A.12-04-019 a replacement for A.04-09-019.