6. Specific Issues to B Addressed

The specific factual and legal issues to be decided in this proceeding are as follows:

Alleged Violations of PUC Section 855:

1. Have the respondents, after notice and hearing, shown cause why the Commission should not petition the Tuolumne County Superior Court for appointment of a receiver to assume possession and operation of the Conlin-Strawberry Water Co., Inc., and its water system?

a. Are the respondents unable or unwilling to adequately serve the utility's ratepayers?

i. As an example, the OII alleges that respondents disregarded a Commission order to install an answering machine or provide an answering service for ratepayer use.

b. Has the operator/owner, Danny T. Conlin, actually or effectively abandoned the utility?

i. For example, the OII alleges that respondents misappropriated Safe Drinking Water Bond Law (SDWBL) loan monies for personal or other unallowed purposes other than system improvements.

ii. For example, the OII alleges that respondents failed to deposit surcharges into the SDWBL Trust Account for repayment of the SDWBL loans.

c. Are respondents unresponsive to the rules or orders of the Commission when they failed to timely comply by September 30, 2000, or any time thereafter with all Commission orders as directed by Resolution W-4207?

2. Legislative intent

a. Did the California Legislature, in enacting Pub. Util. Code § 855, intend that a receiver be appointed under the facts before the Commission in this manner?

b. Does the action proposed in the OII, the appointment of a receiver, comport with the legislative history of Pub. Util. Code § 855?

3. Does the action proposed in the OII, the appointment of a receiver, comport with past Commission precedent?

4. How will ratepayers be affected financially if a receiver is appointed?

Alleged Violations of Other Legal Requirements:

5. If proven, do the allegations set forth in the OII, section III(D), titled "Audit issues from 1983 to 2003," paragraph nos. (1) through (9), constitute additional violations of pertinent State statutes and Commission orders, resolutions, or other rules and regulations? The specific allegations are:

a. Missing deposits to the SDWBL trust account.

b. Unauthorized and excessive management salary.

c. Denial of Commission staff access to utility books and records.

d. Improper accounting methods.

e. False accounting entries for water pumps.

f. Untariffed exemptions and claiming personal expenses as business operating expenses.

g. Unaccounted for labor costs.

h. Undocumented contract work.

i. Inaccurate claims for asset purchases.

6. If sustained at hearing, do any of the violations alleged in the OII, or Exhibits 1 or 2 thereto, warrant fines, penalties, or other appropriate remedies?

Defenses/Mitigation:

7. Do the allegations in the staff report, set forth in Exhibits 1 and 2 to the OII, reflect current conditions?

8. To what extent is the financial condition of the Colin-Strawberry Company due to the failure to receive timely rate relief from the Commission?³

As to Issue No. 2, above, the Water Division may file a timely prehearing motion seeking to exclude evidence concerning this issue on the grounds that Pub. Util. Code § 855 is not ambiguous and, therefore, extraneous evidence of legislative intent should not be admitted.

³ The Water Division opposed the inclusion of this issue in the proceeding. At the PHC, the ALJ requested the parties to submit declarations by December 31, 2003 (extended to January 5, 2004), concerning the Water Company's apparently unsuccessful efforts to secure ratemaking from the Commission. The Water Division filed the declaration of Kerrie Evans on January 5, 2004; the Water Company filed no declaration. Nevertheless, this issue has been included to allow the Water Company to further develop this purported defense. The Water Division is not precluded from filing an appropriate motion concerning the sufficiency of the defense once discovery is completed and prepared testimony has been filed.