V. Proposed Settlement

On August 8, 2000, pursuant to Rule 51 of the Rules of Practice and Procedure, RRB and SJWC filed a Motion for Adoption of Settlement. They reached agreement on all issues except for the proper ROE for SJWC. The Settlement addresses: SJWC's capital structures, cost of long-term debt, consumption and operating revenues, operation and maintenance expenses, administrative and general expenses, taxes, plant in service, depreciation expense and rate base. The Settlement discusses the issues and sets forth the original positions of the parties and the adopted settlement. The Settlement is attached to this decision as Appendix A.

We will approve the Settlement. The Settlement meets the Commission's standards for all-party settlements, is reasonable in light of the record as a whole, is consistent with the law, and is in the public interest. The Commission has developed criteria for evaluating all-party settlements. These criteria are that: (1) all active parties must sponsor the settlement, (2) the sponsoring parties must be fairly reflective of the affected interests, (3) the settlement cannot contravene statutory provisions of prior Commission decisions, and (4) the settlement must convey sufficient information to allow the Commission to discharge future regulatory obligations with respect to the parties and their interests.¹

The Settlement meets these requirements with respect to the issues it resolves. RRB and SJWC are the only two parties in the proceeding. The sponsoring parties, RRB and SJWC, are fairly reflective of the interests affected by this ratemaking proceeding, RRB representing ratepayer interests and SJWC representing its own interests. No party has proposed that the Settlement or any part of it contravenes statutory provisions or prior Commission decisions, and it does not. Finally, the Settlement conveys sufficient information for the Commission to discharge its regulatory duties. The Settlement sets forth clearly the ratemaking treatment associated with each issue it resolves. Thus, the Settlement between RRB and SJWC meets these all-party criteria, and so should be approved.

Turning from the all-party criteria, the Commission's Rules of Practice and Procedure also address criteria for the adoption of settlements. Under its rules, the Commission will not approve a settlement unless it is reasonable in light of the whole record, consistent with the law, and in the public interest.² The Settlement between RRB and SJWC meets these requirements, as well.

The Settlement is consistent with the whole record. The record in this proceeding, as it relates to issues resolved by the Settlement, consists of the Settlement itself, the relevant portions of SJWC's direct testimony,³ and ORA's report.⁴ No other party filed testimony, and there was no oral testimony relating to issues resolved by the Settlement.

The Settlement is consistent with the law. Neither RRB nor SJWC has suggested that the Settlement's resolution of any issue is inconsistent with the law, and none is.

The Settlement is in the public interest. The public interest is served because the active parties agreed on a mutually beneficial outcome, while representing the major interests of the proceeding. The Settlement is a reasonable compromise that fairly serves the interests of SJWC, its shareholders, customers, and employees and the public. Commission and party resources are freed up and the cost of litigation is avoided.

We now address below the one contested issue in this proceeding.