Decision 00-07-014 July 6, 2000
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of Application of Tito Balling Inc., (A California Corporation) for a Certificate of Public Convenience and Necessity to Purchase the Traver Water Company, a Mutual Water Company in the Town of Traver in Tulare County, and to Establish Flat Rates for Water Service. |
Application 99-07-049 (Filed July 30, 1999) |
OPINION
Statement of Facts
The Traver Water Company (Traver), also known as the Traver Mutual Water Company, was organized in 1969 to provide potable water for domestic use to approximately 180 connections in the small community of Traver along Highway 99, nine miles south of Kingsburg in Tulare County. The intention of the organizers was to form a mutual water company; however, that intention was not fully carried out and no records of the organization or ownership have been found, although a water distribution system obtaining its water from a deep well drilled in 1969 was constructed and is in operation today.
Over the years leading to 1990, the system fell into a state of disrepair from lack of management and maintenance, and was unresponsive to the rules and orders of the Tulare County Department of Health Services (TCDHS). In 1990, this state of affairs led TCDHS to petition Superior Court for the appointment of a receiver (Case No. 141700). The Court appointed Tito Balling (Balling) receiver, and on April 20, 1990, Balling assumed possession of the system for all operations and maintenance. Balling was directed to oversee the election of a board of directors and to complete the incorporation of Traver. However, no residents were willing to serve. Consequently, since 1990 Balling has operated Traver as the Court appointed receiver.
In October 1998, Balling filed a report accounting for his receivership, and a petition for instructions. These resulted in a Superior Court order filed December 29, 1998 providing, inter alia, that the receiver obtain a valuation of the Traver assets, publish a notice of sale with notice to the ratepayers, solicit bids, and sell to the highest bidder able to obtain authorizations from TCDHS and the California Public Utilities Commission (Commission). The proceeds of the sale, net of selling expense, are to be distributed, pro rata, to the ratepayers of record as of the date of sale.
To comply with the Superior Court's order, Balling obtained the services of Frank B. Associates (Associates), a water management consulting firm. The valuation of the Traver assets obtained as of February 8, 1999 was $111,000.1
The December 29, 1998 Superior Court order specifically provided that the receiver, Balling, or any entity that he controlled, was eligible to submit a purchase bid, and if successful, could acquire the Traver assets subject to the dual conditions ordered by the court.
So as to meet these conditions, Tito Balling, Inc. (Balling, Inc.),2 a California close corporation, sought approval from TCDHS and filed the captioned applications before the Commission seeking a Certificate of Public Convenience and Necessity (CPCN) to own, operate, and maintain Traver, assuming its bid was successful. The application also sought approval of the flat rates then in effect as initial rates should the CPCN be granted.
On August 24, 1999, the application was protested by the Ratepayer Representation Branch (RRB) of the Commission's Water Division.
On September 28, 1999, public notice was made of the pending sale of the Traver assets, and bids were solicited through the office of the Tulare County Escrow Service. Close of bidding was set for November 15, 1999, and the sale was subject to approval of the Superior Court. At the request of Balling's representative of record, further proceedings on the protested application were placed on hold pending the Court's determination of the successful bidder.
Balling, Inc.'s successful bid was $86,000 in cash. By an order filed March 7, 2000, the Honorable Paul A. Vortman, Judge of the Tulare County Superior Court, approved the sale of the Traver assets to Balling, Inc., subject to the dual conditions previously stated.
On March 16, 2000, Balling, Inc.'s representative requested that Administrative Law Judge (ALJ) John B. Weiss proceed with the application. On April 5, 2000, RRB informed ALJ Weiss that as the sale was a court ordered sale with no protest from customers, RRB withdrew its protest and recommended ex-parte treatment of the application.
Pursuant to Rule 6.1(a) of the Commission's Rules of Practice and Procedure (Rules), by ALJ Resolution 176-3021 issued August 5, 1999, the Commission preliminary determined that the application be categorized as ratesetting and did not require a hearing. There is no reason to reconsider that determination and RRB's recommendation for ex-parte treatment is also adopted.
1 The Appraiser gave consideration to market values based upon Reproduction Cost Less Depreciation ($135,000) and capitalization of income ($86,000). Because no comparable sales could be identified, no market value based upon comparable sales was determined. By giving equal weight to each valuation method used, a fair market valuation of $111,000 was determined. 2 Balling, Inc.'s principal stockholders are Tito and Linda Balling. Balling, Inc. has two operating Divisions:- a. California Water Services, a service oriented water management
company operating water and sewer systems, with contracts with:
Fresno County Service Areas 30, 32 and 40; 1-5 Properties for Freeway
Interchanges in the Avalon Area; the community of Violetta; Cities of
Kettleman and Huron; Summerville/Almond Tree Partners, and
several farm water systems. b. Tito Balling Inc., dba Purified Water To Go, located in San Luis Obispo,
sells bottled water.
