6. Reduction of Comment Period

Because of the urgency in starting construction, we have on our own motion shortened the comment period to ten days pursuant to Pub. Util. Code § 311(g)(3) and Rule 77.7(f)(9) of the Rules of Practice and Procedure. The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1. Comments were received on _____________.

Findings of Fact

1. Donner has 1,300 connections and serves customers in areas around Donner Lake, west of Truckee.

2. Customers since June 22, 2000, have been directed to boil their water before drinking it.

3. The boil-water order followed a DHS inspection that revealed that significant leaks in the system caused a low-pressure vacuum that was likely to create backflow of contaminated water.

4. On November 20, 2000, DHS issued a compliance order directing Donner to replace much of its distribution pipelines, as well as portions of its production and storage systems, during the year 2001.

5. Donner seeks authority to borrow up to $15.5 million to renovate the water system over a five-year period, and to assess a surcharge to repay the debt.

6. The authority to borrow up to $15.5 million would include the authorization for $1.3 million granted by this Commission on an emergency basis in D.01-03-060.

7. Donner has completed engineering plans to accomplish the work required by DHS.

8. Donner's applications for a commercial loan and a low-interest Revolving Fund loan have been submitted and preliminarily approved, subject to authorization by this Commission.

9. Since acquiring the system eight years ago, Donner repeatedly has been slow to correct deficiencies noted by DHS.

10. The Utility District, which already provides water to 7,500 customers in the area, is seeking to acquire the Donner water system.

11. In balloting to form a special assessment district, 87% of voting property owners favored acquisition of the Donner water system by the Utility District.

12. The planned renovations to Donner's water system are required for public health and safety, and must be performed regardless of whether Donner continues to own the water system or it is acquired by the Utility District.

13. ORA and Donner propose a settlement agreement that would approve Donner's application subject to appropriate restrictions on how the borrowed funds would be used and subject to approval of renovation work by the DHS.

14. Because of weather, the construction season in Truckee is limited to late April through October.

Conclusions of Law

1. For reasons detailed in the Discussion section of the foregoing Opinion and in the Findings, the settlement agreement between ORA and Donner should be approved.

2. Donner should be authorized to borrow up to $15,514,400 (including the $1,360,500 authorized in D.01-03-060), subject to the terms, conditions and restrictions set forth in the settlement agreement.

3. It is the intention of this Commission that loans obtained pursuant to this decision be assumable by or transferable to the Utility District if the Utility District acquires the Donner water system.

4. The protest of customer intervenors is granted to the extent it seeks restrictions on the loan authority granted to Donner.

5. The protest of customer intervenors is denied to the extent it seeks disapproval of the application.

6. Because of the urgency in starting construction, the comment period in this matter should be shortened to ten days, and the order should be made effective upon adoption.

ORDER

IT IS ORDERED that:

1. Donner Lake Water Company (Donner) is authorized pursuant to Pub. Util. Code §§ 816, et seq., to issue evidence of indebtedness and secure interim commercial financing in an amount not to exceed $4,500,000 (including $1,360,500 authorized in Decision 01-03-060), and thereafter to secure a Safe Drinking Water State Revolving Fund loan in an amount not to exceed $15,514,400, using not more than $4,500,000 thereof to retire the interim commercial financing, and to grant a security interest in its assets for capital expenditures within its Donner Lake Service Area.

2. The authority granted in Ordering Paragraph 1 is subject to the terms, conditions, and restrictions set forth in the settlement agreement between Donner and the Office of Ratepayer Advocates, Water Branch, attached hereto and made part hereof as Attachment 1.

3. Donner is authorized to file an Advice Letter imposing a surcharge of $27 per month on ratepayers, subject to the requirements of Paragraph 7 of Attachment 1.

4. The period for public comment on the draft decision in this matter was shortened to ten days pursuant to Pub. Util. Code § 311(g)(3) and Rule 77.7(f)(9) of the Rules of Practice and Procedure.

5. Application 00-12-011 is closed.

This order is effective today.

Dated _____________, at San Francisco, California.

ATTACHMENT 1

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of the Donner Lake Water Company (U 84-W ) to Issue Evidence of Indebtedness (Promissory Notes and Loan Agreements) in the Approximate Amount of $12,000,000 and to Grant Security Interest in its Assets for Capital Expenditures Within its Donner Lake Service Area.

Application 00-12-011

In the Matter of the Application of the Donner Lake Water Company (U 84-W ) to Issue Evidence of Indebtedness (Promissory Notes and Loan Agreements) in the Approximate Amount of $12,000,000 and to Grant Security Interest in its Assets for Capital Expenditures Within its Donner Lake Service Area.	Application 00-12-011