6. Fines and Penalties

The Division of Water and Audits recommended that $7,500 in penalties should be assessed against respondents for their failure to comply with various Commission and CDPH rules, as detailed in Exhibit 2, pages 33 and 34.

Commission D.98-12-075 set forth five factors to be considered in assessing a penalty. Those factors involve an analysis of: 1) the severity of offense; 2) the conduct of the utility; 3) the financial resources of the utility; 4) the totality of circumstances; and 5) the role of precedent.⁴⁴

The record regarding the severity of the offenses, conduct of the utility, and totality of circumstances would support a penalty. However, it is difficult to justify a penalty based on the financial resources factor. That is because financial resources of the violator are considered to determine the size of a penalty that would deter Respondents from future violations without becoming excessive. As reported in Respondents' annual reports for the past five years, Respondents have operated at a loss in each of those years. Any penalty would be deemed excessive because Respondents do not have the resources to pay any penalty. A penalty should not be assessed at this time.

⁴⁴ 84 CPUC2d, 154, at 182-185.