7. Comments on Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. No comments have been filed.

Findings of Fact

1. Applicant seeks authority to serve as a public utility water company and a public utility sewer company.

2. Applicant's service area would include 3,653 acres of subdivided land near Carmel Valley in Monterey County.

3. The service area now includes 62 customers and is expected to increase to 365 customers by the year 2010.

4. Applicant's source of water includes on-site wells and water right permits that allow withdrawal of 147 acre-feet of water annually from Carmel River.

5. The County of Monterey has completed environmental review of the water system and the subdivisions within the service area.

6. Applicant is contributing approximately 85% of plant necessary for operation of the water, reclaimed water and sewer systems.

7. ORA investigated the application and has recommended approval, with conditions.

8. Cal-Am is unable to serve the service area because it has an inadequate water supply.

9. Applicant's proposed rates for low/moderate-income homes are comparable to those levied by Cal-Am.

10. Overall, applicant's water operations are expected to generate a return of 13%.

11. The average sewer service bill per customer would be $64 per month in the year 2010, comparable to the rates of a nearby sewer service.

12. Applicant has sufficient financial resources to operate the utility, and it has posted a $1.5 million letter of credit to guarantee financial capability.

Conclusions of Law

1. Applicant has a sufficient source of water to serve its service area.

2. The water and sewer system have been in operation for three years and are professionally managed.

3. Applicant's utility operation will be financially viable.

4. Rates proposed by applicant will cover utility expenses and will provide a 13% return to the utility owners.

5. Applicant should be required to maintain its agreement with Cal-Am granting Cal-Am the option to purchase the system in the future.

6. Applicant should be required to file tariff sheets pursuant to General Order 96-A, with a copy to the manager of the ORA Water Branch.

7. Applicant should be required to make a filing with the DHS or County Health Department to show adequate technical, managerial and financial capacity to operate a water system.

ORDER

IT IS ORDERED that:

1. Cañada Woods Water Company, LLC (applicant) is granted a certificate of public convenience and necessity to construct and operate a public utility water system in Monterey County in the area set forth on the service area map identified as Exhibit I of the application.

2. Applicant is granted a certificate of public convenience and necessity to construct and operate a public utility sewer system in Monterey County in the area set forth on the service area map identified as Exhibit I of the application.

3. Applicant is authorized to file after the effective date of this order the rates set forth in Exhibit V of the application, together with rules and tariff service area map acceptable to this Commission and in accordance with the requirements of General Order 96-A. Such rates, rules and tariff service area map shall become effective on five days' notice to the Commission and to the public after filing as provided herein.

4. Concurrent with the filings set forth in Order Paragraph 3, applicant shall serve a copy of such filings on the manager of the Water Branch of the Office of Ratepayer Advocates.

5. Applicant shall until further notice by the Commission maintain its agreement with California-American Water Company set forth as Attachment M to the application.

6. Applicant shall comply with Section 116540 of the Health and Safety Code prior to commencing utility operations.

7. The authority granted herein shall terminate if not exercised on or before 12 months from the effective date of this order.

8. This proceeding is designated as ratesetting; hearings are not required.

9. This proceeding is closed.

This order is effective today.

Dated April 4, 2002, at San Francisco, California.

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