5. Conditions of Approval Recommended
by ORA

In its application, Cañada Woods provides a copy of an agreement with Cal-Am granting the latter the option to purchase the system in the future, with the purchase price set at depreciated book value. (Application, Attachment M.)

ORA regards this option as one that is favorable to consumers. ORA urges that the provision be made a condition of approval of the application.

Section 116540 of the Health and Safety Code provides that new public water systems and systems that change ownership shall demonstrate to the Department of Health Services (DHS) that the supplier meets "TMF" requirements, that is, that it possesses adequate technical, managerial and financial capability to assure delivery of safe drinking water. Cañada Woods maintains that, because of its size, it is under the jurisdiction of the Monterey County Health Department, and the code section does not now apply. Nevertheless, ORA recommends that Cañada Woods be required to seek TMF approval from the DHS to be certain that all legal requirements for a new water utility are met.

The company has provided its proposed rates and a revenue requirement study as Exhibit V of the application. Cañada Woods declined to provide ORA with draft tariff sheets, stating that it would file tariffs after it received certificates of public convenience and necessity. ORA recommends that when tariff sheets are filed pursuant to General Order 96-A, the utility be required to furnish a copy to the manager of the ORA Water Branch.