COM/MP1/SK1/rg1/acb* DRAFT Agenda ID# 3475

Ratesetting

Agenda Item 88 4/22/04

Decision _________________

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SOUTHERN CALIFORNIA WATER COMPANY (U 133-W), for an order authorizing it to increase rates for water service by $19,826,100 or 29.72% in the year 2003; by $6,327,800 or 7.31% in the year 2004; and by $6,326,200 or 6.81% in the year 2005 in its Region III Service Area and to increase rates for the General Office Allocation in all of its Customer Service Areas in this Application including: Arden-Cordova, Bay Point, Clearlake, Los Osos, Ojai, Santa Maria, Simi Valley and Metropolitan.

Application 02-11-007 (Filed November 4, 2002)

OPINION GRANTING PETITION TO MODIFY D.04-03-039

I. Summary

On March 16, 2004, the Commission adopted Decision (D.) 04-03-039, which grants Southern California Water Company (SCWC) authority to increase rates in its Region III Service Area. The Commission found that SCWC violated Public Utilities Code Section 851 (§ 851) when it failed to seek the Commission's approval for its lease of water rights to the City of Folsom (City). Additionally, the Commission held that the City's retrospective use of the water rights was unaffected by the voided lease agreement. The Commission deferred to a subsequent decision, following briefing by the parties, the issue of Folsom's prospective rights under the voided lease. The City seeks relief, as it believes that serious and immediate effects have occurred because the Commission did not preserve its prospective rights under the lease. As such, the City has filed a petition to modify D. 04-03-039's treatment of prospective water rights leased from SCWC. After a review of the new information provided to the City, we conclude that § 851 protects the City's acquired interest in the water both with respect to the past and to the future notwithstanding our voiding of the lease as to SCWC.