The Settlement Agreement

In the settlement agreement (Attachment A to this decision), the parties agreed as follows:

· The sales price for the Turlock property is $2.8 million. The net book values of the land and building are $1,245,816 and $1,859,634, respectively. There is no gain on sale associated with this transaction.

· For a period of two years after the date of this transaction, GVN shall cap at $3,100,000 the ratebase amount associated with the acquisition of land and an office building in Patterson to replace the land and office building located in Turlock for California ratemaking purposes. If GVN files a general rate case (GRC) application for test year 2007 or earlier, GVN shall assume no more than $3,100,000 in rate base associated with the land and building acquired to replace the land and building located in Turlock. The $3,100,000 rate base cap shall be reduced by the associated accumulated depreciation adopted in GVN's last GRC (Resolution T-16720) for California ratemaking purposes.

· For the purposes of regulatory accounting, GVN shall book any loss associated with this transaction below the line.

· For the purposes of regulatory accounting, GVN shall cap moving expenses associated with the move from Turlock to Patterson at $100,000.

The parties state that these conditions will enable GVN to relocate to Patterson and will also ensure that the move will not adversely affect GVN ratepayers for the next several years.