ALJ/VDR/avs DRAFT Agenda ID#2160

8/21/2003 Item 107

Decision PROPOSED DECISION OF ALJ RYERSON (Mailed 4/30/2003)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Investigation on the Commission's own motion into the operations, practices, rates and charges of the Hillview Water Company, Inc., a corporation, and Roger L. Forrester, the principal shareholder and president, Respondents.

Investigation 97-07-018 (Filed July 16, 1997)

Carol A. Dumond, Attorney at Law, and
Mohsen Kazamzadeh, for the Commission's
Water Division.

Douglas W. Stern and Leslie Ravestein,
Attorneys at Law, and Roger L. Forrester,
for Hillview Water Company, Inc., and
Roger L. Forrester, respondents.

FINAL OPINION

TABLE OF CONTENTS

TITLE PAGE

FINAL OPINION 3

Summary 3

Introduction and Procedural History 3

Background 9

1. Hillview's Borrowing and Lending History 9

2. Fees for Facility Additions 17

Discussion 22

1. Did the Respondents Violate Commission Orders on the Extension of Service to New Customers? 22

2. Did the Respondents Submit Falsified Contracts or Information
to the Commission? 25

3. Did the Respondents Charge Customers Unauthorized Fees for the Connection of Service and in Turn Rebate Amounts in
Contravention of Tariff and Service Extension Requirements
to Shopping Center Developers? 26

4. Did the Respondents Divert Revenue Collected Expressly to Repay a SDWBA Loan from a Special Account and Apply the Funds to Other Purposes, Including Personal Business Use by Forrester? 28

5. Did Hillview's AL 53 Misstate the Level of the Special Fund
Account Due to Unlawful Diversions? 29

6. Did the Respondents Overstate Long-Term Debt and Hillview's
Plant Account by Misrepresenting Loans Obtained by Forrester
for Personal Business? 30

7. Did the Respondents Obtain a Personal Loan of $350,000 from a Developer, Then Ask the Commission for Authority to Repay it
Without Acknowledging that the Loan Was Used, or Intended
to be Used, for a Personal or Non-Utility Purpose? 34

Conclusion 36

Comments on the Proposed Decision 38

Assignment of Proceeding 41

FINDINGS OF FACT 41

CONCLUSIONS OF LAW 44

FINAL ORDER 45

FINAL OPINION

Summary

This decision resolves all of the outstanding issues that relate to the above-captioned Order Instituting Investigation (OII). These issues relate to the respondents' alleged violation of statutes administered by the Commission, as well as Commission Rule of Practice and Procedure (Rule) 1.¹ We determine that the respondents, Hillview Water Company, Inc. (Hillview or the company) and Roger L. Forrester (Forrester), violated Section 491 and Section 825 of the California Public Utilities Code, and we order the respondents to prepare a reconciliation of accounts for the period from January 1, 1991, to and including July 31, 1998, to explain discrepancies that came to our attention as the consequence of this investigation. We also provide that the proceeding may be reopened for the limited purpose of adjusting Hillview's rates if the reconciliation indicates that the company's revenue requirement is materially inaccurate for ratemaking purposes, and we establish a five-year probationary period as a precaution to prevent a reoccurrence of these violations. Investigation (I.) 97-07-018 is closed.