Conclusion

There is substantial evidence in the record demonstrating that the respondents engaged in conduct that, on its face, was contrary to various Commission-approved tariffs and statutes this Commission enforces. Instances of this conduct are specifically enumerated in the Findings of Fact and Conclusions of Law. The respondents have candidly admitted committing these acts.

Many of these compliance problems have already been redressed by previous Commission orders, including the approval of a reduced rate of return in the Hillview's 1993 general rate case as a direct consequence of its failure to seek approval of previous loans. Customers who paid "supply and storage" fees that were arguably subject to partial refund have paid lower rates as the result of the company's treatment of these fees as contributions instead of advances, and it appears that accurate reconstruction of records on the basis of which refunds potentially could be made is impossible in any event. The rate consequences to customers of the initially underreported CIAC balance were offset by the company's increased investment in plant on which it earned no return over an eight-year period during the course of this investigation.

Since 1996 the company has utilized the services of legal and accounting professionals, and as far as we are aware its compliance history has been satisfactory since that time. Staff has made no effort to amend the OII or institute a new proceeding as directed in OP 1 to bring to our attention any additional allegations of misconduct on the part of the company or its owners.

These facts indicate that although the company's conduct, particularly during the period from 1991 through 1994, was reprehensible in many respects, no harm has come to its customers, with the exception of any consequences from the loss of funds that may have been misappropriated from the SDWBA account by Judith. Moreover, in other phases of this proceeding we saw evidence that Hillview is making conscientious efforts to finance and build sorely needed supply and treatment facilities to serve its customers.

The respondents argue that, notwithstanding any finding we make on the merits that they violated a statute or rule, we are barred by various statutes of limitations from granting any relief in the form of penalties or restitution to individual customers. We need not reach this issue in light of our determination to forgo such relief in this proceeding. Our major concern is to ensure that the company provides a full and accurate accounting to reflect our findings, and to make a rate adjustment pursuant to OP 5 of the OII if necessary.

Our order also provides that Staff may, in a new proceeding, seek to have water service provided to Hillview's customers by means other than a utility managed by Forrester if, within five years, there is a recurrence of the violations we have found here. OP 5 expressly provides for such relief in the event that it appears Forrester is unfit to manage a public utility. It does not so appear on the record before us, but we order this probationary relief as a precaution to prevent future regulatory compliance lapses.