2. Request

By this application, California-American Water Company (Cal-Am) seeks to expand its Certificate of Public Convenience and Necessity (CPCN) to provide wastewater services. Cal-Am's current CPCN only allows it to provide water service, and it does not currently own wastewater assets in California. Cal-Am seeks permission to acquire three wastewater districts that the County of Monterey (County) put up for sale through a request for bid process; Cal-Am was the winning bidder. If granted permission to acquire the wastewater districts, Cal-Am would create a Monterey Wastewater Division and serve the division with a single tariff as proposed in its bid to the County.

The purpose of this proceeding is to determine whether or not Cal-Am should be granted permission to expand its CPCN to provide wastewater service, acquire three wastewater districts from the County, and charge the proposed rate for service to all customers.

The issues raised by the application fall into three primary areas: health and safety; rates, accounting, and ratemaking; and gray water entitlements. The broad category of health and safety includes the experience of Cal-Am relevant to owning and operating a wastewater system, whether the systems being acquired meet minimum standards of design and construction, and whether proposed plant improvements are necessary. In the rate, accounting, and ratemaking area, issues include the accounting treatment of the purchase, the reasonableness of the proposed rates, whether a single tariff is appropriate, and the rate of return. The final issue is whether customers are entitled to existing or future use of gray water and under what terms. Other issues, including the reasonableness of the costs and operation of the wastewater systems by the County, the County's bidding process, and the County's decision not to hold an election regarding its decision to sell the three wastewater providers were ruled outside of the scope of the proceeding.