2. Background

On February 1, 2005, Apple Valley filed this general rate case pursuant to D.04-06-018 that adopted a rate case plan for Class A water companies such as Apple Valley. Apple Valley is a wholly-owned subsidiary of Park Water Company (Park).¹ Apple Valley requests that rates for Test Year 2006 increase by $2,748,100, or 18.56%, and indicates that subsequently, its rates are expected to increase in Escalation Years 2007 and 2008 by an estimated $496,580 (2.69%) and $1,075,879 (5.46%), respectively, pursuant to the method adopted in the rate case plan. Apple Valley says that the Escalation Years are shown for illustration and customer information purposes, and it will file advice letters to implement subsequent rate changes as allowed by D.04-06-018.

On March 22, 2005, a prehearing conference was held to determine parties, identify issues, consider the schedule, and address other matters. Public participation hearings were held on April 5, 2005, in Apple Valley's service territory. Evidentiary hearings were held June 6 - 8, 2005. Opening briefs were filed by Apple Valley and the Office of Ratepayer Advocates (ORA) on July 1, 2005, and reply briefs on July 8, 2005, in accordance with the schedule adopted in the March 29, 2005, Scoping Memo and Ruling of the Assigned Commissioner and Administrative Law Judge (scoping memo).

The scoping memo designated the assigned Administrative Law Judge (ALJ) as the principal hearing officer as defined in Rule 5(l) of the Commission's Rules of Practice and Procedure (Rules). It also determined that this is a ratesetting proceeding. Pursuant to Rule 5(k)(2), the principal hearing officer is the presiding officer for this proceeding. Accordingly, the proposed decision of the ALJ was issued pursuant to Rule 8.1(b).

By a ruling dated April 7, 2005, Apple Valley was required to serve additional testimony presenting an analysis of a low-income customer assistance program, omitted in the original application but required by D.03-08-069, and to supplement its testimony on cost of capital. Apple Valley served the additional and supplemental testimony on May 1, 2005.

¹ See Apple Valley Ranchos Water Company - Main Office/Cost of Capital Report - Test Year 2006, p. 1.