5. Discussion
The inability of Respondents to operate Yermo adequately has been a Commission and CDPH concern since at least 1993. Respondents made no direct showing at the evidentiary hearing to substantiate that the Commission should not petition the San Bernardino County Superior Court to appoint a receiver to assume possession and operate Yermo. Based on the Division of Water and Audits' cross examination of Respondents and its direct testimony as discussed in the body of this order, Respondents have consistently violated and remain in violation of Commission and CDPH orders. These violations include failure to respond to Commission and CDPH orders, ignoring the need for capital improvements, moving the business office out-of-state, the lack of a certified water operator, nonpayment of a $43,800 CDPH penalty, not correcting outstanding CDPH violations, G.O. 103 noncompliance, noncompliance with Yermo's own tariffs, delinquent user fee billings and payments, outdated user fee tariff, delinquent filing of Annual Reports, not maintaining a purchased power balancing account, and not maintaining accurate customer complaint logs.
A contributing factor to these violations is Respondent Walker's limited water business experience and knowledge. Respondent Walker's only water experience prior to acquiring Yermo was in constructing wells and a lake outside of the CDPH jurisdiction.40 Respondent Walker does not have a civil engineering background and does not have a certified state water operator's license. Prior to purchasing Yermo he was in the car business and in a flea market swap business in Las Vegas. Respondent Walker still has car dealerships in Georgia and Florida and continues to operate Yermo from Florida. Respondents are not and have not been familiar with Commission or CDPH rules for the past 22 years.41
Because of the pervasive and persistent violations of Commission and CDPH orders, and Respondent Walker's limited water business experience and knowledge, we conclude that Respondents are unable or unwilling to adequately serve Yermo's ratepayers.
Although Respondents have been trying to sell Yermo for the past ten years they have been unsuccessful in finding a buyer.42 Capital investments to Yermo have been almost nonexistent, with total utility plant decreasing from $367,810 in 1993 to $101,210 at the end of 2007. Total utility plant net of accumulated depreciation at year end 2007 was approximately $23,000. Yermo has also been operating at a loss since at least 2003. Lack of operating and capital funds is due in part to Respondents' failure to provide water service pursuant to authorized tariffs and failure to seek periodic rate increases since 1993.
Respondent Walker seeks to continue operating Yermo for six months to a year after his pending rate increase is granted to make the water system more saleable. However, Respondent Walker has been unable to demonstrate to the Commission that he is capable of operating the water system, or that he is familiar with the Commission and CDPH rules. The need to protect the public health of Yermo's customers precludes us from permitting Respondents to continue operating the water system even for a limited period of time.
YCSD has expressed an interest in acquiring Yermo but it has been unable to obtain sufficient information from Respondents. Hence, YCSD wants the Commission to: (1) retain jurisdiction over Yermo until YCSD completes its application for re-acquisition of the water powers necessary to take control of Yermo, (2) order Respondents to furnish essential information for YCSD to move forward with purchase of the water system and, (3) establish the estimated cost of Yermo.
Even if we had the authority to require Respondents to provide YCSD all the information that it has requested there is no assurance that YCSD would receive the information. The Commission is still waiting to receive Resolution W-3812 information which it required Respondents to submit 14 years ago. Further, absent Respondents' agreement, the Commission does not have authority to establish a cost for Yermo.43 YCSD may pursue its interest in acquiring Yermo through the Superior Court of San Bernardino.
Respondents have not substantiated that they are able or willing to adequately serve Yermo's customers or are responsive to the rules and orders of the Commission and CDPH. Pursuant to Pub. Util. Code § 855, the Commission's Legal Division is directed to immediately start proceedings in the Superior Court of San Bernardino County for appointment of a receiver to take possession of and operate Yermo.
40 Reporter's Transcript, Volume 1, mimeo. at 3 through 5.
41 Reporter's Transcript, Volume 1, mimeo. at 39.
42 Id., mimeo. at 26.
43 Pub. Util. Code § 1405.1.
