Comments on Proposed Decision, and CalAm's Motion to Reduce Waiting Period

The principal hearing officer's proposed decision was filed February 8, 2000 with the Commission and served on all parties in accordance with Section 311(d) of the Public Utilities Code and Rule 77.1 of the Rules of Practice and Procedure.

After unsuccessfully soliciting voluntary waivers from the parties, CalAm on February 7 filed a motion to reduce the 30-day waiting period required under Section 311(d). MPWMD and DOD/FEA supported a reduction; RRB, Dilworth and Krieger did not. CalAm's motion is now moot.

Krieger filed timely comments on the proposed decision. There were no other comments filed, and no replies to comments. Krieger's comments were primarily argument against the Settlement, the confidential negotiation process that gave rise to it, and a perceived lack of support in it for the outcome it reaches. Under Rule 51.5, any failure by a party to file comments during the Rule 51.4 settlement comment period constitutes a waiver by that party of all objections to a settlement. Krieger did not respond during the comment period and may not now object to the Settlement. After careful review, minor changes have been made to the Procedural History section of the proposed decision to reflect Krieger's comments.

Findings of Fact

1. Parties George T. Krieger and David Dilworth did not participate actively in this proceeding.

2. CalAm, RRB, MPWMD and DOD/FEA have entered into a settlement which resolves every issue among them in this proceeding except certain aspects of rate design.

3. The Settlement commands the sponsorship of all active parties.

4. The active parties are fairly reflective of all of the affected interests in this proceeding.

5. No term of the Settlement contravenes statutory provisions or prior Commission decisions.

6. The Settlement, together with the record in this proceeding, conveys sufficient information to permit the Commission to discharge its future regulatory obligations with respect to the parties and their interests.

7. There is no known opposition to approving the Settlement.

8. The summaries of earnings presented in Table 2 and the quantities and calculations included as Appendix C which underlie them are reasonable for ratemaking purposes.

9. The 2000 rates and 2001 and 2002 step increases in Appendix A-1 have been designed to produce revenues consistent with Monterey Division's adopted summaries of earnings.

10. CalAm faces extraordinary water supply challenges in its Monterey Division that call for strong water conservation measures, and that justify variations from our standard water rate design policy.

11. Implementing additional rate blocks with higher quantity rates will induce high-usage customers to conserve who have not previously responded to calls for conservation, and will result in significant water savings.

12. The per capita rate design and associated implementation conditions addressed in Settlement Section 11.02 are reasonable and necessary to reduce Monterey Division water usage during times when CalAm is at risk of exceeding its State Water Resources Control Board-mandated Carmel River production limits.

Conclusions of Law

1. The Settlement is an "uncontested settlement" as defined in Rule 51(f).

2. The Settlement is reasonable in light of the whole record, consistent with law, and in the public interest.

3. The Settlement should be adopted.

4. The revised rates and step increases set forth in Appendix A-1 are justified.

5. CalAm's proposed modified-current rate design, including additional rate blocks with higher quantity rates, should be adopted.

6. This decision should be made effective immediately to enable CalAm to implement its new rate design and rates without delay.

ORDER

IT IS ORDERED that:

1. The revised Settlement (Appendix D to this order) by California-American Water Company (CalAm), Ratepayer Representation Branch of the Commission's Water Division (RRB), Monterey Peninsula Water Management District (MPWMD) and the US Department of Defense and Federal Executive Agencies (DOD/FEA) is adopted.

2. CalAm is authorized to file in accordance with General Order 96 and make effective on not less than five days' notice tariffs containing the test year 2000 increases and revisions shown in Appendix B to the Settlement. The revised rates shall apply to service rendered on and after the tariffs' effective date.

3. CalAm is authorized to file in accordance with General Order 96 and make effective on not less than 30 days' notice and not sooner than January 1, 2001, and January 1, 2002, tariffs implementing the 2001 and 2002 step rate increases shown in Appendix A-1 to this order. The revised rates shall apply to service rendered on and after the tariffs' effective date.

4. The summaries of earnings presented in Table 2, and the quantities and calculations included as Appendix C to this order which underlie them, are adopted.

5. The Commission adopts the per capita rate design structure addressed in Settlement Section 11.02, as summarized in Appendix A-2 to this order, and the associated implementation conditions for use during times when CalAm is at risk

of exceeding its State Water Resources Control Board-mandated Carmel River production limits.

6. Application 99-04-003 is closed.

This order is effective today.

Dated March 16, 2000, at San Francisco, California.

RICHARD A. BILAS

President

HENRY M. DUQUE

JOSIAH L. NEEPER

CARL W. WOOD

LORETTA M. LYNCH

Commissioners

APPENDIX A-1

APPENDIX A-1

APPENDIX A-1

PAGE 1 of 7

PAGE 2 of 7

PAGE 3 of 7

CALIFORNIA-AMERICAN WATER COMPANY

AUTHORIZED RATES AND STEP RATE INCREASES

AUTHORIZED RATES AND STEP RATE INCREASES

MONTEREY DIVISION

SCHEDULE NO. MO-1

SCHEDULE NO. MO-1

AUTHORIZED RATES AND STEP RATE INCREASES

CALIFORNIA-AMERICAN WATER COMPANY

CALIFORNIA-AMERICAN WATER COMPANY

SCHEDULE NO. MO-1

MONTEREY DISTRICT - A.99-04-003

MONTEREY DISTRICT - A.99-04-003

Step Rate

Step Rate

PAR Customers

All Other Customers

Rates for

Increase

Increase

Authorized

Authorized

2000

01/01/01

01/01/02

Step Rate

Step Rate

Step Rate

Step Rate

Quantity Rates:

Rates for

Increase

Increase

Rates for

Increase

Increase

2000

01/01/01

01/01/02

2000

01/01/01

01/01/02

Elevation Surcharge:

Elevation Zone 1, per 100 cu. ft.

$0.1774

$0.00

$0.00

Service Charges:

Service Charges:

Elevation Zone 2, per 100 cu. ft.

$0.4036

$0.00

$0.00

For 5/8 x 3/4 - inch meter

$0.00

$0.00

$0.00

For 5/8 x 3/4 - inch meter

$12.21

$0.70

$0.81

Residential and PAR Customers:

For 3/4 - inch meter

$0.00

$0.00

$0.00

For 3/4 - inch meter

$18.32

$1.05

$1.22

For the first 800 cu. ft., per 100 cu. ft.

$1.8374

$0.00

$0.00

For 1 - inch meter

$0.00

$0.00

$0.00

For 1 - inch meter

$30.53

$1.75

$2.03

For the next 800 cu. ft., per 100 cu. ft.

$2.4498

$0.00

$0.00

For 1-1/2 - inch meter

$0.00

$0.00

$0.00

For 1-1/2 - inch meter

$61.05

$3.50

$4.05

For the next 1,600 cu. ft., per 100 cu. Ft.

$4.8996

$0.00

$0.00

For 2 - inch meter

$0.00

$0.00

$0.00

For 2 - inch meter

$97.68

$5.60

$6.48

Over 3,200 cu. ft., per 100 cu. ft.

$9.7992

$0.00

$0.00

For 3 - inch meter

$0.00

$0.00

$0.00

For 3 - inch meter

$183.15

$10.50

$12.15

For 4 - inch meter

$0.00

$0.00

$0.00

For 4 - inch meter

$305.25

$17.50

$20.25

Service Charge Surcharge, per 100 cu. ft:

$0.6000

$0.04

$0.05

For 6 - inch meter

$0.00

$0.00

$0.00

For 6 - inch meter

$610.50

$35.00

$40.50

Multi-Residential Customers (per dwelling unit):

For the first 400 cu. ft., per 100 cu. ft.

$1.8374

$0.00

$0.00

For the next 400 cu. ft., per 100 cu. ft.

$2.4498

$0.00

$0.00

For the next 400 cu. ft., per 100 cu. ft.

$4.8996

$0.00

$0.00

Over 1,200 cu. ft., per 100 cu. ft.

$9.7992

$0.00

$0.00

Service Charge Surcharge, per 100 cu. ft:

$0.6000

$0.04

$0.05

Authorized

Other Special Use Customers:

For all water delivered, per 100 cu. ft.

$3.6747

$0.00

$0.00

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

All Other Customers:

For all units delivered up to monthly allotment

Service Charges:

Per 100 cu. ft.

$2.4498

$0.00

$0.00

For all units delivered over monthly allotment

Per 100 cu. ft.

$4.8996

$0.00

$0.00

APPENDIX A-1

PAGE 2 of 7

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DIVISION

AUTHORIZED RATES AND STEP RATE INCREASES

SCHEDULE NO. MO-1

PAR Customers

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

Service Charges:

For 5/8 x 3/4 - inch meter

$0.00

$0.00

$0.00

For 3/4 - inch meter

$0.00

$0.00

$0.00

For 1 - inch meter

$0.00

$0.00

$0.00

For 1-1/2 - inch meter

$0.00

$0.00

$0.00

For 2 - inch meter

$0.00

$0.00

$0.00

For 3 - inch meter

$0.00

$0.00

$0.00

For 4 - inch meter

$0.00

$0.00

$0.00

For 6 - inch meter

$0.00

$0.00

$0.00

For 8 - inch meter

$0.00

$0.00

$0.00

Residential &

Multi-Residential Customers

Authorized

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

Service Charges:

For 5/8 x 3/4 - inch meter

$6.11

$0.35

$0.41

For 3/4 - inch meter

$9.16

$0.53

$0.61

For 1 - inch meter

$15.26

$0.87

$1.02

For 1-1/2 - inch meter

$30.53

$1.75

$2.03

For 2 - inch meter

$48.84

$2.80

$3.24

For 3 - inch meter

$91.58

$5.25

$6.08

For 4 - inch meter

$152.63

$8.75

$10.13

For 6 - inch meter

$305.25

$17.50

$20.25

For 8 - inch meter

$488.40

$28.00

$32.40

APPENDIX A-1

PAGE 3 of 7

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DIVISION

AUTHORIZED RATES AND STEP RATE INCREASES

SCHEDULE NO. MO-1

All Other Customers

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

Service Charges:

For 5/8 x 3/4 - inch meter

$12.21

$0.70

$0.81

For 3/4 - inch meter

$18.32

$1.05

$1.22

For 1 - inch meter

$30.53

$1.75

$2.03

For 1-1/2 - inch meter

$61.05

$3.50

$4.05

For 2 - inch meter

$97.68

$5.60

$6.48

For 3 - inch meter

$183.15

$10.50

$12.15

For 4 - inch meter

$305.25

$17.50

$20.25

For 6 - inch meter

$610.50

$35.00

$40.50

For 8 - inch meter

$976.80

$56.00

$64.80

APPENDIX A-1

PAGE 4 of 7

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DIVISION

AUTHORIZED RATES AND STEP RATE INCREASES

SCHEDULE NO. MO-1-68

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

Quantity Rates:

Residential Customers:

For the first 800 cu. ft., per 100 cu. ft.

$2.2410

$0.00

$0.00

For the next 2,200 cu. ft., per 100 cu. Ft.

$2.8534

$0.00

$0.00

Over 3,000 cu. ft., per 100 cu. ft.

$5.3032

$0.00

$0.00

Service Charge Surcharge:

$0.7822

$0.0449

$0.0448

All Other Customers:

For all water delivered, per 100 cu. ft.

$2.8534

$0.00

$0.00

APPENDIX A-1

PAGE 5 of 7

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DIVISION

AUTHORIZED RATES AND STEP RATE INCREASES

SCHEDULE NO. MO-1-68

PAR Customers

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

Service Charges:

For 5/8 x 3/4 - inch meter

$0.00

$0.00

$0.00

For 3/4 - inch meter

$0.00

$0.00

$0.00

For 1 - inch meter

$0.00

$0.00

$0.00

For 1-1/2 - inch meter

$0.00

$0.00

$0.00

For 2 - inch meter

$0.00

$0.00

$0.00

For 3 - inch meter

$0.00

$0.00

$0.00

For 4 - inch meter

$0.00

$0.00

$0.00

For 6 - inch meter

$0.00

$0.00

$0.00

For 8 - inch meter

$0.00

$0.00

$0.00

Residential &

Multi-Residential Customers Authorized

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

Service Charges:

For 5/8 x 3/4 - inch meter

$6.11

$0.35

$0.41

For 3/4 - inch meter

$9.16

$0.53

$0.61

For 1 - inch meter

$15.26

$0.87

$1.02

For 1-1/2 - inch meter

$30.53

$1.75

$2.03

For 2 - inch meter

$48.84

$2.80

$3.24

For 3 - inch meter

$91.58

$5.25

$6.08

For 4 - inch meter

$152.63

$8.75

$10.13

For 6 - inch meter

$305.25

$17.50

$20.25

For 8 - inch meter

$488.40

$28.00

$32.40

APPENDIX A-1

PAGE 6 of 7

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DIVISION

AUTHORIZED RATES AND STEP RATE INCREASES

SCHEDULE NO. MO-1-68

All Other Customers

APPENDIX A-1

PAGE 7 of 7

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DIVISION

AUTHORIZED RATES AND STEP RATE INCREASES

SCHEDULE NO. MO-4 & MO-4H

Step Rate

Step Rate

Rates for

Increase

Increase

2000

01/01/01

01/01/02

SCHEDULE NO. MO-4, PRIVATE FIRE PROTECTION SERVICE

For each 4 - inch connection and smaller

$22.98

$0.44

$0.47

For each 6 - inch connection

$46.51

$0.90

$0.96

For each 8 - inch connection

$73.55

$1.41

$1.52

For each 10 - inch connection

$104.12

$1.99

$2.16

SCHEDULE NO. MO-4H, PRIVATE FIRE HYDRANT SERVICE

For each fire hydrant installed

$22.19

$0.42

$0.46

(END OF APPENDIX A-1)

APPENDIX A-2

PAGE 1 OF 3

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

AUTHORIZED PER CAPITA RATE DESIGN FOR USE DURING WATER SHORTAGES

RESIDENTIAL CUSTOMERS

(Includes PAR & Multi-Residential; excludes Hidden Hills service area)

TABLE NO A-2-1

BLOCK	USAGE	RATES
1	up to 1 ECU	50% of standard rate
2	from 1 ECU to 2 ECUs	100% of standard rate
3	from 2 ECUs to 3 ECUs	150% of standard rate
4	from 3 ECUs to 4 ECUs	200% of standard rate
5	above 4 ECUs	400% of standard rate

ALL OTHER CUSTOMERS

TABLE NO A-2-2

USAGE	RATES
Up to allotment	100% of standard rate
Above allotment	300% of standard rate

Each customer within the Monterey District, with the exclusion of customers in the Hidden Hills service area, will be assigned a monthly water allotment. Monthly water allotments for residential customers are outlined in the following section. All other customers will be assigned a monthly water allotment in accordance with criteria established by Monterey Peninsula Water Management District (MPWMD) based on the particular business type and individual water needs. The Per Capita water rates are based upon these allotments. The standard rate for residential, PAR (Program for Alternative Rates), and multi-residential customers is the rate charged in the second quantity block (as authorized in Appendix A-1). The standard rate for all other customers is the rate charged in the first quantity block (as authorized in Appendix A-1).

The Per Capita rates will become effective upon ten days notification by California-American to the Commission's Water Division that California-American has exceeded the month-end production goals set forth in MPWMD's Ordinance No. 92.

Once triggered, the Per Capita rates will remain in effect for the remainder of the water-year. Rates will revert to those of the normal rate design (Appendix A-1) for bills issued on and after December 1 if the month-end production goal is met during the first two months of the following water-year.

APPENDIX A-2

PAGE 2 OF 3

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

AUTHORIZED PER CAPITA RATE DESIGN FOR USE DURING WATER SHORTAGES

RESIDENTIAL MONTHLY WATER ALLOTMENT & RATES DETERMINATION

(Includes PAR & Multi-Residential; excludes Hidden Hills service area)

First, determine monthly water allotment:

1. Determine base allotment using Table A-2-3.

2. Apply lot size adjustment for Winter or Summer to determine total units allotted.

Next, divide total units allotted by 2 to get the Equivalent Consumption Unit (ECU).

Then use Table A-2-1 to determine appropriate rates to be applied.

Example: Residential Customer with 3 people, 1 acre of land, and 1 large animal.

Base allotment is 8 units (7+1).

Winter adjustment is 1 unit, therefore winter allotment is 9 units (8+1).

Winter ECU is 4.5 Ccf.

Summer adjustment is 5 units ([2x3]-1), therefore summer allotment is 13 units (8+5).

Summer ECU is 6.5 Ccf.

For this example, the effective rates are:

BLOCK	WINTER USAGE	SUMMER USAGE	RATES
1	up to 4.5 Ccf	up to 6.5 Ccf	50% of standard rate
2	next 4.5 Ccf	next 6.5 Ccf	100% of standard rate
3	next 4.5 Ccf	next 6.5 Ccf	150% of standard rate
4	next 4.5 Ccf	next 6.5 Ccf	200% of standard rate
5	over 18 Ccf	Over 26 Ccf	400% of standard rate

APPENDIX A-2

PAGE 3 OF 3

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

AUTHORIZED PER CAPITA RATE DESIGN FOR USE DURING WATER SHORTAGES

TABLE A-2-3

	UNITS PER MONTH
NUMBER OF PEOPLE
1 Person	3
2 People	5
3 People	7
4 People	9
5 People	10
6 People	12
7 People	13
8 People	14
9 People	15
10 People	16
11 People	17
12 People	18
SIZE OF LOT
No outside space	0
Up to ¼ acre	1
Over ¼, up to ½ acre	2
Over ½, up to 1 acre	3
Over 1 acre, up to 2 acres	4
Over 2 acres, up to 3 acres	6
Over 3 acres, up to 4 acres	8
Greater than 4 acres	10
ALLOTMENT FOR LARGE ANIMALS
1 or 2 large animals	1
3 to 5 large animals	2
6 to 10 large animals	3
11 to 20 large animals	4
Over 20 large animals	5

WINTER (NOVEMBER TO APRIL) ADJUSTMENT:

No outside space: no adjustment

Outside space: add 1 unit

SUMMER (MAY TO OCTOBER) ADJUSTMENT:

No outside space: no adjustment

Outside space: add twice the units allotted for outside space minus 1 unit

(END OF APPENDIX A-2)

APPENDIX B

PAGE 1 OF 5

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

BILL COMPARISON

TEST YEAR 2000, and 2001 & 2002 Step Increases

Comparison of typical bills for residential metered customers (in Elevation Zone 1) of various usage levels and average level at present and authorized rates for 2000, 2001, and 2002.

PUC Reimbursement Surcharge is not included in these figures.

General Metered Service

(5/8 x 3/4-inch meters)

Monthly

2000

2001

2002

Usage

Present

Authorized

Percent

Authorized

Percent

Authorized

Percent

(cubic feet)

Rates

Rates

Increase

Step Rates

Increase

Step Rates

Increase

0

$5.92

$6.11

3.2%

$6.46

5.7%

$6.87

6.3%

500

$20.03

$19.18

-4.2%

$19.73

2.9%

$20.39

3.3%

794

(avg.)

$28.33

$26.87

-5.2%

$27.54

2.5%

$28.35

2.9%

1000

$35.37

$33.48

-5.3%

$34.23

2.2%

$35.14

2.7%

2000

$79.52

$75.55

-5.0%

$76.70

1.5%

$78.11

1.8%

3000

$138.37

$132.32

-4.4%

$133.87

1.2%

$135.78

1.4%

5000

$256.07

$334.06

30.5%

$336.41

0.7%

$339.32

0.9%

10000

$550.32

$862.89

56.8%

$867.24

0.5%

$872.65

0.6%

APPENDIX B

PAGE 2 OF 5

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

BILL COMPARISON

TEST YEAR 2000, and 2001 & 2002 Step Increases

Comparison of typical bills for a multi-residential metered customer with 5 dwelling units (in Elevation Zone 1) at various usage levels at present and authorized rates for the test years 2000, 2001, and 2002.

PUC Reimbursement Surcharge is not included in these figures.

General Metered Service

(1-inch meters)

Monthly

2000

2001

2002

Usage

Present

Authorized

Percent

Authorized

Percent

Authorized

Percent

(cubic feet)

Rates

Rates

Increase

Step Rates

Increase

Step Rates

Increase

0

$14.79

$15.26

3.2%

$16.13

5.7%

$17.15

6.3%

500

$24.53

$28.33

15.5%

$29.40

3.8%

$30.67

4.3%

1000

$34.26

$41.41

20.9%

$42.68

3.1%

$44.20

3.6%

2000

$53.74

$67.56

25.7%

$69.23

2.5%

$71.25

2.9%

3000

$73.21

$99.83

36.4%

$101.90

2.1%

$104.42

2.5%

5000

$112.16

$188.87

68.4%

$191.74

1.5%

$195.26

1.8%

10000

$209.52

$668.70

219.2%

$673.57

0.7%

$679.59

0.9%

APPENDIX B

PAGE 3 OF 5

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

BILL COMPARISON

TEST YEAR 2000, and 2001 & 2002 Step Increases

Comparison of typical bills for PAR residential metered customers (in Elevation Zone 1) of various usage levels and average level at present and authorized rates for the test years 2000, 2001, and 2002.

PUC Reimbursement Surcharge is not included in these figures.

General Metered Service

(5/8 x 3/4-inch meters)

Monthly

2000

2001

2002

Usage

Present

Authorized

Percent

Authorized

Percent

Authorized

Percent

(cubic feet)

Rates

Rates

Increase

Step Rates

Increase

Step Rates

Increase

0

$0.00

$0.00

0.0%

$0.00

0.0%

$0.00

0.0%

500

$14.11

$13.07

-7.4%

$13.27

1.5%

$13.52

1.9%

604

(avg.)

$17.05

$15.79

-7.4%

$16.03

1.5%

$16.34

1.9%

1000

$29.45

$27.37

-7.1%

$27.77

1.5%

$28.27

1.8%

2000

$73.60

$69.44

-5.7%

$70.24

1.2%

$71.24

1.4%

3000

$132.45

$126.21

-4.7%

$127.41

1.0%

$128.91

1.2%

5000

$250.15

$327.95

31.1%

$329.95

0.6%

$332.45

0.8%

10000

$544.40

$856.78

57.4%

$860.78

0.5%

$865.78

0.6%

APPENDIX B

PAGE 4 OF 5

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

BILL COMPARISON

TEST YEAR 2000, and 2001 & 2002 Step Increases

Comparison of typical bills for Hidden Hills residential metered customers (in Elevation Zone 2) of various usage levels and average level at present and authorized rates for the test years 2000, 2001, and 2002.

PUC Reimbursement Surcharge is not included in these figures.

General Metered Service

(5/8 x 3/4-inch meters)

Monthly

2000

2001

2002

Usage

Present

Authorized

Percent

Authorized

Percent

Authorized

Percent

(cubic feet)

Rates

Rates

Increase

Step Rates

Increase

Step Rates

Increase

0

$5.92

$6.11

3.2%

$6.46

5.7%

$6.87

6.3%

500

$21.02

$21.23

1.0%

$21.80

2.7%

$22.43

2.9%

1000

$37.34

$37.57

0.6%

$38.37

2.1%

$39.22

2.2%

1501

(avg.)

$55.54

$55.78

0.4%

$56.81

1.8%

$57.89

1.9%

2000

$73.67

$73.92

0.3%

$75.17

1.7%

$76.48

1.7%

3000

$109.99

$110.28

0.3%

$111.98

1.5%

$113.73

1.6%

5000

$231.64

$231.99

0.2%

$234.58

1.1%

$237.23

1.1%

10000

$535.75

$536.26

0.1%

$541.10

0.9%

$545.99

0.9%

APPENDIX B

PAGE 5 OF 5

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

BILL COMPARISON

TEST YEAR 2000, and 2001 & 2002 Step Increases

Comparison of typical bills for Ryan Ranch residential metered customers (in Elevation Zone 2) of various usage levels and average level at present and authorized rates for the test years 2000, 2001, and 2002.

PUC Reimbursement Surcharge is not included in these figures.

General Metered Service

(2-inch meters)

Monthly

2000

2001

2002

Usage

Present

Authorized

Percent

Authorized

Percent

Authorized

Percent

(cubic feet)

Rates

Rates

Increase

Step Rates

Increase

Step Rates

Increase

0

$47.32

$48.84

3.2%

$51.64

5.7%

$54.88

6.3%

500

$61.10

$63.96

4.7%

$66.98

4.7%

$70.44

5.2%

1000

$74.89

$80.30

7.2%

$83.55

4.0%

$87.23

4.4%

1875

(avg.)

$99.01

$112.11

13.2%

$115.75

3.2%

$119.83

3.5%

2000

$102.46

$116.65

13.9%

$120.35

3.2%

$124.49

3.4%

3000

$130.03

$153.01

17.7%

$157.16

2.7%

$161.74

2.9%

5000

$185.17

$274.72

48.4%

$279.76

1.8%

$285.24

2.0%

10000

$323.01

$578.99

79.2%

$586.28

1.3%

$594.00

1.3%

(END OF APPENDIX B)


APPENDIX C
PAGE 1 of 4

CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT


ADOPTED QUANTITIES
TEST YEARS 2000 & 2001


Net-to-Gross Multiplier		1.7905
Uncollective Rate		0.2869%
Federal Tax Rate		35.00%
State Tax Rate		8.84%

		2000	2001
1. PURCHASED POWER

PG&E
Effective Date - 1/1/98
Production (kCcf)		6,596,800	6,597,500
Total kWh		12,891,617	12,892,199
Kwh/Ccf		1.9542	1.9541
Unit Cost ($/kWh)		$0.111530	$0.111533

Total Purchased Power Cost ($000)		$1,437.8	$1,437.9

2. PURCHASED WATER		$0.0	$0.0

3. CHEMICALS ($000)		$326.4	$326.4

4. NUMBER OF METERED SERVICES
	No. of		No. of
Meter Size	Services		Services

5/8 x 3/4-inch meter	31,325		31,327
3/4 -	125		125
1 -	3,779		3,779
1 -1/2 -	730		730
2 -	584		584
3 -	42		42
4 -	37		37
6 -	9		9
8 -	5		5
Total Metered Services	36,636		36,638

APPENDIX C

PAGE 2 of 4

CALIFORNIA-AMERICAN WATER COMPANY

MONTEREY DISTRICT

ADOPTED QUANTITIES

TEST YEARS 2000 & 2001

5. WATER CONSUMPTION

2000

2001

Usage

Consumption

Usage

Consumption

Classification

Services

(Ccf/Cust.)

(kCcf)

Services

(Ccf/Cust.)

(kCcf)

Metered Service

Residential

31,204

95.3

2,973.7

31,206

95.3

2,973.9

PAR Customers

246

72.5

17.8

246

72.4

17.8

Multi-Residential

1,409

543.3

765.5

1,409

543.3

765.5

Commercial

3,017

474.5

1,431.6

3,017

474.5

1,431.6

Hidden Hills

368

180.1

66.3

368

180.1

66.3

Ryan Ranch

120

225.0

27.0

123

225.0

27.7

Industrial

6

8,318.8

49.9

6

8,318.8

49.9

Public Authority

474

1,155.5

547.7

474

1,155.5

547.7

Golf Course

12

10,675.8

128.1

12

10,675.8

128.1

Viscaino Reclamation Tank

1

25,000.0

25.0

1

25,000.0

25.0

Sale for Resale

1

3,614.0

3.6

1

3,614.0

3.6

Other

0

0.0

0.0

0

0.0

0.0

Construction

20

833.1

16.7

20

833.1

16.7

Subtotal

36,878

6,052.9

36,883

6,053.8

Non-Domestic Fire Service

2

0

2

0

Private Fire Hydrants

719

0

719

0

Public Fire Hydrants

13

0

13

0

Total Connections

37,612

37,617

Unaccounted Water, kCcf (8.2%)

540.8

540.8

Other

0.9

0.9

Total Water Produced

6,594.6

6,595.5

Total Water Production

6,594.6

6,595.5

Surface Water (kCcf)

1,045.2

1,045.4

Well Water (kCcf)

5,549.3

5,550.1


APPENDIX C
PAGE 3 of 4


CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

ADOPTED RATE BASE
TEST YEARS 2000 & 2001

	2000	2001
	($000)	($000)

Wtd. Average Utility Plant in Service	109,371.1	114,447.6

Plus Additions To Rate Base
Materials and Supplies	167.7	169.5
Working Cash, Operational	1,648.5	1,858.3
Working Cash, Lead-Lag	1,142.6	1,119.7
Subtotal Additions	2,958.8	3,147.5
Less Deductions From Rate Base
Wtd. Avg. Reserve for Depreciation	33,738.8	36,608.4
Advances for Construction	167.5	151.1
Contributions in Aid of Construction	8,584.9	8,684.9
General Office Allocation	(916.3)	(1,037.2)
ACRS & MACRS Depreciation
Unamortized ITC	0.0	0.0
Capitalized Items	0.0	0.0
Silver	0.0	0.0
Deferred Revenues	0.0	0.0
Accum. Deferred FIT	6,835.7	7,024.5
Accum. Deferred SIT	543.2	586.2
Subtotal Deductions	48,953.8	52,017.9

Average Rate Base	63,376.1	65,577.2


APPENDIX C
PAGE 4 of 4

CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

INCOME TAX CALCULATIONS
TEST YEARS 2000 & 2001
	2000	2001
	($000)	($000)
Revenues
Operating Revenues	23,215.1	23,662.3
Revenues from Contributions	20.5	20.2
Total Taxable Operating Revenues	23,235.6	23,682.5
Deductions:
O & M Expenses	6,539.6	6,661.7
A & G Expenses	5,015.9	5,041.7
Depreciation & Amortization	3,151.5	3,377.1
Taxes Other Than Income	943.7	947.1
Book Depreciation	0.0	0.0
Interest Expense	2,580.9	2,723.1
Total Deductions	18,231.6	18,750.7

Taxable Income	5,004.0	4,931.8

STATE INCOME TAX

State Tax Depreciation	0.0	0.0
Taxable Income for California Corporation Franchise Tax (CCFT)	5,004.0	4,931.8

Current CCFT Rate	8.84%	8.84%

CCFT	442.4	436.0
Less Deferred Taxes	3.8	3.8
Total State Income Tax Expense	438.6	432.2

FEDERAL INCOME TAX

Federal Tax Deductions	373.4	438.6
Taxable income for Federal Income Tax	4,630.6	4,493.2

Current FIT Rate	35.00%	35.00%

FIT	1,620.7	1,572.6

Less:
ITC	44.7	44.7
Deferred Taxes	20.1	20.1
Amortization of Reg. Assets	16.1	16.1
Total Federal Income Tax	1,539.8	1,491.7

TOTAL INCOME TAX EXPENSE	1,978.4	1,923.9

(END OF APPENDIX C)

APPENDIX D

In the Matter of the Application of California- )

American Water Company (U210W) for an ) Application 99-04-003

Order Authorizing it to Increase Rates for Water )

Service for its Monterey Division. )

SETTLEMENT

1.00 GENERAL

1.01 The Parties to this Settlement before the California Public Utilities Commission (Commission) are California-American Water Company ("Cal-Am"), the Ratepayer Representation Branch ("RRB") of the Water Division, the Monterey Peninsula Water Management District ("MPWMD"), and the Department of Defense on behalf of the Presidio of Monterey - collectively, "the Parties." The Parties, desiring to avoid the expense, inconvenience, and uncertainty attendant to litigation of the matters in dispute between them have agreed on this Settlement which they now submit for approval.

1.02 In addition, since this Settlement represents a compromise by them, the Parties have entered into each Stipulation on the basis that its approval by the Commission not be construed as an admission or concession by any Party regarding any fact or matter of law in dispute in this proceeding. Furthermore, the Parties intend that the approval of this Settlement by the Commission not be construed as a precedent or statement of policy of any kind for or against any Party in any current or future proceeding.

1.03 The Parties agree that no signatory to this Settlement or any member of RRB assumes any personal liability as a result of their agreement. The Parties agree that no legal action may be brought by any Party in any state or federal court, or any other forum, against any individual signatory representing the interests of RRB, attorneys representing RRB, or the RRB itself related to this Settlement. All rights and remedies of the Parties are limited to those available before the Commission.

1.04 No Party to this Settlement should provide, either privately or publicly, before this Commission any rationale or strategy for support of any compromise reached herein beyond that stated herein unless otherwise agreed to by the Parties.

1.05 All issues among the Parties, except for certain issues relating to the design of rates, have been resolved. The Settlement between the Parties would result in an increase in rates for Cal-Am of $875,000, or 3.92%, in 2000; $444,500, or 1.99%, in 2001; and $508,300, or 2.15%, in 2002.

1.06 The following discussion addresses the items settled by the Parties. Attached as Appendix A to this Settlement are tables which show RRB's and Cal-Am's stipulated estimates.

1.07 Differences between Cal-Am's and RRB's estimates are, for the most part (except as specifically noted), due to the findings in RRB's audit and, in some instances, due to later data available to RRB. Some stipulated expenses are the consequence of additional discussion between RRB and Cal-Am, with results which are no greater than Cal-Am's estimates but greater than RRB's estimates.

2.00 Cost of Capital

RRB and Cal-Am agree to a ratio of 54% debt to 46% equity for Test Year 2000, and 56% debt to 44% equity for Test Year 2001 and Attrition Year 2002. RRB and Cal-Am agree to a cost of debt of 7.88% for Test Year 2000, 7.77% for Test Year 2001 and 7.73% for Attrition Year 2002. RRB and Cal-Am agree to a cost of equity of 9.70%, plus 0.25% to recognize a portion of the savings ratepayers receive from the relatively high proportion of debt, resulting in a total cost of 9.95% for each Test Year. The original positions of RRB and Cal-Am are listed below.

Cal-Am's Original Position - Return on Common Equity 10.59%

RRB's Original Position - Return on Common Equity 8.88%

Settlement - Return on Common Equity 9.95%

Table JS-1, attached, sets forth the positions of RRB and Cal-Am

3.00 General Office

3.01 Office L - Expenses

RRB and Cal-Am had similar estimates for most expenses of Office L. Cal-Am agrees to all estimates made by RRB for Office L, except for the following items:

3.01.01 Salaries

RRB sought to disallow the positions of Corporate Counsel and Legal Secretary. Cal-Am was able to demonstrate, however, that the Corporate Counsel was well versed in environmental law and does not duplicate the services provided by outside counsel and that the Legal Secretary also serves as a secretary for the Human Resources Department. Cal-Am and RRB agree that salaries should be increased to reflect the level of salaries for qualified executives as if the Management Incentive Program had not been in effect. Cal-Am and RRB agree that wages should be increased by 2% for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $2,524.0 $2,251.3 $2,478.4

2001 $2,587.2 $2,298.3 $2,514.3

3.01.02 Rent

Cal-Am intends to build and occupy a new Corporate Office, replacing currently leased space. Cal-Am projects to occupy the new office in late 2001. RRB and Cal-Am agree that the new office should be included in ratebase upon its completion by filing an advice letter. As a result, total rental expense should be allowed for Test Year 2001 and split 50/50 between Office L and Office C. See Sections 3.02.03 and 3.06.01, below.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $203.8 $203.8 $203.8

2001 $248.2 $169.1 $208.1

3.01.03 Maintenance

RRB and Cal-Am agree that maintenance in 2001 should be adjusted to reflect the exclusion of the new office in ratebase until its completion.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $57.5 $57.8 $58.0

2001 $88.0 $58.6 $58.8

3.01.04 Group Insurance and Other Post Employment Benefits

RRB and Cal-Am agree that Group Insurance should be calculated according to current rates, which have increased since Cal-Am's original filing, and based upon the stipulated level of employees and wages. RRB accepts Cal-Am's revised calculations for Other Post-Retirement Employment Benefits ("OPEB") of $162,200 for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $293.6 $133.4 $352.8

2001 $297.1 $136.1 $355.8

3.01.05 Depreciation

RRB and the Cal-Am agree that Depreciation is calculated correctly by Cal-Am in its application.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $324.4 $324.4 $324.4

2001 $330.8 $239.4 $330.8

3.01.06 Federal Insurance Compensation Act

RRB accepts Cal-Am's methodology in calculating expenses relating to the Federal Insurance Compensation Act ("FICA") according to the stipulated level of employees and wages for the Test Years.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $165.8 $123.7 $165.0

2001 $171.2 $127.1 $168.8

Table JS-2.2, attached, sets forth the positions of RRB and Cal-Am relating to Office L.

3.02 Office C - Expenses

RRB and Cal-Am had similar estimates for most expenses of Office C. Cal-Am agrees to all estimates made by RRB for Office C, except for the following items:

3.02.01 Salaries

RRB sought to disallow four positions from Office-C: a) Director - New Business, b) Director - Communications, c) Customer Service Superintendent - Conservation, and d) Customer Service Representative. Cal-Am and RRB agree that the salary for the Director-New Business should not be charged to ratepayers. RRB allows the Director - Communications based on the showing by Cal-Am that this employee performs tasks previously performed by: 1) Los Angeles Community Relations Manager, 2) Monterey Division Community Relations Manager, and 3) Benefits Administrator, along with other responsibilities of the position. RRB also allows the Conservation Superintendent based on Cal-Am's showing that this position is necessary to implement its programs relating to conservation. Cal-Am and RRB agree that a Customer Service Representative should be eliminated due to the implementation of a new system. Cal-Am and RRB agree that wages should be increased by 2% for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $1,323.6 $1,089.0 $1,217.5 2001 $1,367.8 $1,109.6 $1,240.7

3.02.02 Group Insurance and OPEB

RRB and Cal-Am agree that Group Insurance should be calculated according to current rates, which have increased since Cal-Am's original filing, and the stipulated level of employees and wages. RRB accepts Cal-Am's revised OPEB of $145,300 for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $269.2 $141.4 $280.6

2001 $274.9 $143.2 $285.5

3.02.03 Rent

RRB and Cal-Am agree that the new office should be included in ratebase upon its completion by the filing of an advice letter. As a result, rental expense for Test Year 2001 should be based on a full year and split 50/50 between Office L and Office C.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $194.1 $195.7 $195.7

2001 $138.0 $169.1 $198.4

3.02.04 General Office

RRB and Cal-Am agree that General Office should be adjusted to reflect the exclusion of operating costs of the new office until it is complete and recognized for ratemaking.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $327.2 $282.0 $310.5

2001 $344.3 $285.2 $314.4

3.02.05 Dues and Memberships

RRB agrees to Cal-Am's estimate of dues and memberships. Additionally, RRB and Cal-Am agree that dues and memberships for the following items should reflect the following percentages as nonrecoverable expense: a) 50% of National Association of Water Companies, b) 62% of California Water Association, and c) 62% of Chamber of Commerce.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $124.1 $56.2 $107.3

2001 $126.6 $56.7 $108.8

3.02.06 Depreciation

RRB and Cal-Am agree that Depreciation should be adjusted based on stipulated plant for Office C.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $221.6 $170.9 $216.9

2001 $281.5 $185.5 $258.9

3.02.07 FICA

RRB accepts Cal-Am's methodology in calculating expenses relating to FICA according to the stipulated level of employees and wages for the Test Years.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $101.3 $67.5 $93.1

2001 $104.9 $67.5 $94.9

3.02.08 General Taxes

RRB agrees with Cal-Am that general taxes for Cal-Am's parcel of land for the new office should be allowed in rates.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $27.6 $3.4 $27.6

2001 $28.1 $3.4 $28.1

Table JS-2.3, attached, sets forth the positions of RRB and Cal-Am.

3.03 Office R1 (Los Angeles Laboratory) - Expenses

RRB and Cal-Am had similar estimates for most expenses of Office R1. Cal-Am agrees to all estimates made by RRB for Office R1, except for the following items:

3.03.01 Salaries

Cal-Am and RRB agree that wages should be increased by 2% of current compensation for Test Years 2000 and 2001. RRB accepts that the employee who works at the Los Angeles Laboratory but is classified as an employee of the corporate office should be included in the Los Angeles Laboratory.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $111.4 $56.8 $110.5

2001 $115.3 $58.0 $112.8

3.03.02 Group Insurance and OPEB

RRB and Cal-Am agree that Group Insurance should be calculated according to current rates, which have increased since Cal-Am's original filing, and the stipulated level of employees and wages . RRB also accepts Cal-Am's revised OPEB of $7,900 and $8,000 for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $18.7 $6.1 $20.5

2001 $19.1 $6.1 $20.8

3.03.03 Depreciation

RRB and Cal-Am agree that Depreciation should be adjusted based on the stipulated additions for Office R1.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $14.3 $8.5 $14.3

2001 $15.9 $9.9 $15.7

3.03.04 FICA

RRB accepts Cal-Am's methodology in calculating expenses relating to FICA according to the stipulated level of employees and wages for the Test Years.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $8.5 $3.5 $8.5

2001 $8.8 $3.6 $8.6

Table JS-2.4, attached, sets forth the positions of RRB and Cal-Am on these expenses.

3.04 Office R2 (Monterey Laboratory) - Expenses

RRB and Cal-Am had similar estimates for most expenses of Office R2. Cal-Am agrees to all expense estimates made by RRB for Office R2, except for the following items:

3.04.01 Salaries

Cal-Am and RRB agree that wages should be increased by 2% for Test Years 2000 and 2001. Cal-Am and RRB agree to the current level of employees.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $114.7 $113.0 $113.8

2001 $118.7 $115.7 $116.1

3.04.02 Group Insurance and OPEB

RRB and Cal-Am agree that Group Insurance should be calculated according to current rates, which have increased since Cal-Am's original filing, and the stipulated level of employees and wages. RRB also accepts Cal-Am's revised OPEB of $7,900 and $8,000 for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $18.3 $11.8 $20.1

2001 $18.7 $12.0 $20.5

3.04.03 Depreciation

RRB and Cal-Am agree that Depreciation is calculated correctly by Cal-Am.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $40.6 $34.9 $40.6

2001 $43.0 $36.7 $42.7

3.04.04 FICA

RRB accepts Cal-Am's methodology in calculating expenses relating to FICA according to the stipulated level of employees and wages for the Test Years.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $8.7 $6.4 $8.7

2001 $8.9 $6.6 $8.9

Table JS-2.5, attached, sets forth the positions of RRB and Cal-Am on these expenses.

3.05 Belleville Laboratory - Expenses

RRB accepts Cal-Am's level of expense for Test Year 2000. Expense for Test Year 2001 should be determined by applying RRB's factors for inflation to the stipulated level of expense for Test Year 2000.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $209.5 $169.5 $209.5

2001 $213.7 $171.5 $212.6

3.06 General Office - Plant in Service, Depreciation, and Ratebase

RRB agrees to all of Cal-Am's proposed additions, except for the following items:

3.06.01 Corporate Office

RRB and Cal-Am agree that the Corporate Office should not be included in ratebase for this proceeding. RRB and Cal-Am agree that Cal-Am should file an advice letter upon the completion of the project to include in ratebase the total cost of the building and its furnishings, not to exceed $1,746,000. RRB also agrees that the land previously acquired for the office at a cost of $410,000 should be transferred from Plant Held for Future Use and into Plant in Service and Ratebase as of January 1, 2000.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

Total $1,960.0 $1,230.0 $1,746.0

3.06.02 Furniture

Cal-Am accepts RRB's estimates for furniture for Test Years 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $6.0 $2.0 $2.0

2001 $12.0 $2.0 $2.0

3.06.03 Computers and Peripherals

RRB and Cal-Am agree that peripherals as well as personal computers should be capitalized. The amount agreed to by RRB and Cal-Am reflects the current cycle of replacement.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $0.0 $16.0 $31.0

2000 $55.0 $16.0 $31.0

2001 $55.0 $16.0 $31.0

3.06.04 Software

RRB accepts Cal-Am's estimates for Test Years 1999 and 2000 to reflect the inclusion of ORCOM. Cal-Am agrees to RRB's estimates for Test Year 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $407.0 $205.0 $407.0

2000 $330.0 $330.0 $330.0

2001 $231.0 $227.5 $227.5

3.06.05 Equipment

Cal-Am accepts RRB's estimate for Test Year 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $10.0 $10.0 $10.0

2001 $35.0 $27.5 $27.5

3.06.06 Computers

RRB accepts Cal-Am's estimates for Test Year 2000 and 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $2.5 $1.0 $2.5

2001 $2.5 $1.0 $2.5

Tables JS-2.7 through JS-2.9, attached, set forth the stipulations of RRB and Cal-Am on these expenditures.

3.07 Future Applications

Cal-Am and RRB agree to apply the terms of this Settlement to the General Office for Cal-Am's next two applications scheduled to be filed for Cal-Am's other Divisions in 2000 and 2001. Accordingly, Cal-Am and RRB agree to estimate plant and expenses for the General Office by escalating the expenses shown in the attached Tables JS-2.2A through JS-2.5A by the appropriate rates for escalating labor, non-labor and composite non-labor. The appropriate escalation, which RRB develops from Data Resources, Inc., should be determined in future proceedings for Cal-Am's other Divisions.

4.00 Average Consumption per Customer and Total Production

Cal-Am accepts RRB's estimates of average consumption for customers in the following classes: Residential, Program for Alternative Rates (PAR), Hidden Hills, Industrial, Public Authority, and Golf Course. RRB accepts Cal-Am's estimates of average consumption for Resale. RRB and Cal-Am agree on the average consumption for Multi-Residential, Commercial, and Ryan Ranch. The original and stipulated estimates are set forth in Table B-1 and Table B-2.

Cal-Am accepts RRB's estimated production for Test Years 2000 and 2001.

Unaccounted Water

RRB and Cal-Am have agreed on a percentage for Unaccounted Water of 8.2% for Test Years 2000 and 2001. Cal-Am's average from 1993 to 1998 for Unaccounted Water is 8.76% and was the rate Cal-Am used in its application. RRB used 7.0% as the rate for Unaccounted Water, which is the amount set forth as a goal by MPWMD in its Ordinance 92. This figure includes only unknown losses due to inaccurate meters and other unknown and nonquantified leaks. Cal-Am's broader definition of Unaccounted Water includes those items plus all known quantities of water used for other purposes, such as Cal-Am's own usage, identified leaks, flushing of mains, hydrants, and water supplied to free services. Known usage in 1997 and 1998 averaged over 1%.

5.00 Operation and Maintenance

Cal-Am accepts RRB's estimates for Operation and Maintenance, except for the following items:

5.01 Purchased Power

RRB and Cal-Am agree that Purchased Power should be adjusted to reflect stipulated production for Test Years 2000 and 2001 using Cal-Am's methodology. RRB and Cal-Am also agree that Cal-Am should be authorized to file an advice letter if the Purchased Power Balancing Account exceeds 1% of the Monterey Division's operating revenues due to changes in rates charged by Pacific Gas and Electric as a result of the recovery of stranded costs or if Cal-Am finds a new supplier with lower rates.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $1,435.6 $1,301.7 $1,437.8

2001 $1,454.2 $1,318.5 $1,437.9

5.02 Chemicals

RRB and Cal-Am agree that Chemicals should be adjusted to reflect the stipulated levels of production and RRB's cost per unit of production.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $461.8 $323.6 $326.4

2001 $478.0 $328.1 $326.4

5.03 Maintenance of Pumping

Cal-Am accepts RRB's estimates, with one exception, because they better represent current trends. The exception is that the RRB's projection for telemetry should be increased by $10,000 to reflect the recent installation of System Control and Data Acquisition.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $209.2 $126.2 $136.2

2001 $216.0 $128.0 $138.0

5.04 Maintenance of Reservoirs and Tanks

RRB accepts Cal-Am's estimates except for the amortization of deferred painting of tanks and deferred maintenance as to which the RRB and Cal-Am stipulate to an adjustment for seismic evaluation and painting.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $193.5 $156.6 $182.8

2001 $234.3 $173.1 $220.6

5.05 Allowance for Uncollectibles

RRB and Cal-Am agree that the Allowance for Uncollectibles should be adjusted to reflect stipulated revenues.

Original Positions @ Proposed Settlement (000s)

Cal-Am RRB

2000 $69.9 $72.0 $66.6

2001 $72.9 $75.0 $67.9

5.06 Testing of Pumps

RRB acknowledges that Cal-Am performs tests on a regular basis for larger pumps that are efficient to test and that pumps that have not been tested are for the most part small in size or inefficient to test.

Table F-1 and Table F-2, attached, set forth the stipulations of RRB and Cal-Am on the above expenses.

6.00 Administrative and General Expenses

RRB agrees to all of Cal-Am's Administrative and General Expenses, except for the following items:

6.01 Payroll

RRB agrees to Cal-Am's level of 76 employees. Additionally, to recognize the inherent lag to replace employees, Cal-Am and RRB agree to a vacancy of 1% for payroll. Cal-Am and RRB agree to apply inflation of 2% to determine payroll. RRB and Cal-Am agree that the Monterey Division Manager's salary should be adjusted to reflect annual increases not received due to the impact of Cal-Am's Management Incentive Plan, which is not to be included as part of payroll.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $3,404.0 $2,685.2 $3,353.3

2001 $3,503.3 $2,474.4 $3,418.4

6.02 Pensions and Benefits

RRB and Cal-Am agree that Pensions and Benefits should be calculated according to the actual expenses and level of employees and wages. RRB agrees to Cal-Am's revised OPEB of $302,325 for Test Year 2000 and $308,371 for Test Year 2001.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $671.2 $300.8 $641.7

2001 $676.3 $304.9 $649.1

6.03 Regulatory Expense

Cal-Am and RRB agree that Cal-Am's estimate should be reduced based on the Parties' ability to reach this Settlement.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $80.8 $38.4 $45.0

2001 $80.8 $38.4 $45.0

6.04 Outside Services

Cal-Am and RRB agree that Outside Services should be decreased to adjust for prior expenditures incurred to educate the public regarding the Carmel River Dam Project.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $139.7 $50.5 $70.0

2001 $142.5 $51.2 $71.1

6.05 Rental Expense

RRB agrees to Cal-Am's estimates of rental expense in Test Year 2000. RRB and Cal-Am stipulate that Cal-Am should be allowed 75% of the rental expense, adjusted for inflation, in 2001 to account for the possibility that Cal-Am will complete a partial sublease on a portion of its current rental space. For Test Year 2002, the amount allowed should be 50% of the current rental expense, adjusted for inflation.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $342.1 $153.9 $342.1

2001 $352.1 $156.0 $270.0

Table G-1 and Table G-2, attached, set forth the positions of RRB and Cal-Am.

7.00 Taxes Other than Income

7.01 Ad Valorem

Cal-Am and RRB agree that ad valorem taxes should be adjusted to reflect the stipulated level of additions.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $742.8 $673.7 $683.6

2001 $761.9 $683.4 $681.8

7.02 Payroll

Cal-Am and RRB agree that taxes on payroll should be adjusted to reflect the number of employees stipulated by RRB and Cal-Am.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $262.4 $205.0 $260.1

2001 $269.9 $215.9 $265.3

7.03 Franchise

RRB agrees that Franchise Taxes should be recovered from the customers in each jurisdiction imposing the tax.

Table H, attached, sets forth the positions of RRB and Cal-Am.

8.00 Plant in Service

RRB agrees to all of Cal-Am's estimates of Plant in Service, except for the following items where a stipulation was reached:

8.01 Item C - Services

RRB and Cal-Am agree on estimates for Test Years 2000 and 2001. RRB accepts Cal-Am's revised estimate for 1999 based on experience to date.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $231.0 $414.9 $454.9

2000 $536.0 $536.0 $536.0

2001 $540.0 $540.0 $540.0

8.02 IP 97089 - Mesa Booster Station

Cal-Am accepts RRB's estimate for the Mesa Booster Station for 1999 of $527,300. Based on the stipulated expenditure for 1999, total costs allowed would be $716,300, of which $189,000 was incurred in prior years.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $561.0 $527.3 $527.3

8.03 IP 98084 - Distribution Monitoring Systems

Cal-Am accepts RRB's lower estimates for SCADA for Test Year 2000 of $998,300 and for Test Year 2001 of $499,200. Based on the stipulated expenditures for 2000 and 2001, total costs for these years should be $1,497,500.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $1,000.0 $998.3 $998.3

2001 $500.0 $499.2 $499.2

8.04 IP 98091 - Reconfiguration of Upper Carmel Valley Wells

Cal-Am and RRB agree that expenditures for Test Year 2000 should be reduced by $75,000. The total cost of the project for 1999 and Test Year 2000 should be $829,000, of which $7,000 was incurred in a prior year.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $497.0 $497.0 $497.0

2000 $400.0 $325.0 $325.0

8.05 IP 99083 - Begonia Iron Removal Plant

Cal-Am and RRB agree that expenditures for the Begonia Iron Removal Plant in Test Year 2000 should be reduced by $5,000. The total allowed cost of the project should be $2,395,000, of which $267,000 was incurred in prior years.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $633.0 $633.0 $633.0

2000 $1,500.0 $1,495.0 $1,495.0

8.06 IP 99084 - Transmission Main Control Valve Station

Cal-Am accepts RRB's lower estimate for the Transmission Main Control Valve in Test Year 2000 of $247,500. Based on the stipulated expenditures for Test Year 2000, total allowed costs of the project should be $297,500.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $50.0 $50.0 $50.0

2000 $250.0 $247.5 $247.5

8.07 IP 99085 - Carmel Valley Filter Plant (Clearwell Project)

Cal-Am accepts RRB's estimate to account for a reduction in Cal-Am's original estimated overhead from 90% to 40% and in related travel.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $3,600.0 $3,502.7 $3,502.7

8.08 IP 99086 - Lower Toyon Tank

Cal-Am and RRB agree that Cal-Am's original estimate should be reduced by $21,000 to reflect a reduction in engineering. Total allowed costs should be $279,000.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $30.0 $30.0 $30.0

2000 $270.0 $245.0 $249.0

8.09 IP 00084 -Distribution Map Automation

Cal-Am accepts RRB's lower estimate of $143,700 for Test Years 2000 and 2001. The reduction is due to a stipulated decrease in estimated overhead and travel.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

1999 $150.0 $143.7 $143.7

2000 $150.0 $143.7 $143.7

8.10 IP 99087 - Corona and Lower Walden Booster Stations

Cal-Am and RRB agree that Cal-Am's original estimate should be reduced by $25,000 due to a decrease in Cal-Am's estimated overhead and travel. The reduction changes overall cost to $375,000.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $75.0 $62.0 $75.0

2001 $325.0 $268.0 $300.0

8.11 Advice Letters

RRB and Cal-Am agree that the following projects should be included in ratebase upon filing and acceptance of an advice letter: a) Realignment of Pressure Zones in Carmel and Pebble Beach; b) Pressure and Fire Protection Improvements in the Presidio Tank Zone; and c) Wastewater Clarifier and Sludge Drying Beds at Begonia Water Treatment Plant. The advice letters for realigning the pressure zones in Carmel and Pebble Beach and for Pressure and Fire Protection in the Presidio Tank Zone would be filed in the year 2000. The advice letter for the Wastewater Clarifier Project will be filed in the year 2001 with a maximum cost of $2,225,000. Any costs in excess of the established cap for the Wastewater Clarifier Project may be requested in the next application for a general increase in rates for the Monterey Division.

8.12 Allowance for Funds Used During Construction

Cal-Am and RRB agree that Cal-Am should continue to accrue and accumulate interest on both the San Clemente Dam Project and the Carmel River Dam Project based on the standard rate for 90-day commercial paper. See the discussion in Special Rate Request No. 6, Section 12.06, below.

Table J-1 and Table J-2, attached, set forth the positions of RRB and Cal-Am.

9.00 Depreciation

RRB and the Cal-Am agree that Depreciation should be based on the stipulated level of expenditures for Test Years 2000 and 2001. As a result, stipulated depreciation for the Test Years is as follows:

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $3,221.7 $1,874.0 $3,151.5

2001 $3,503.7 $2,042.7 $3,377.1

Tables K-1 and K-2, attached, set forth the positions of RRB and Cal-Am.

10.00 Ratebase

RRB and Cal-Am agree that most Ratebase for Test Years 2000 and 2001 is determined by the results of stipulated issues as follows:

10.01 Weighted Average Plant in Service

RRB accepts Cal-Am's factor of 37.51% to calculate Weighted Average Plant in Service.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $115,033.1 $108,783.0 $109,371.1

2001 $121,555.1 $112,067.8 $114,447.6

10.02 Working Cash

RRB accepts Cal-Am's amount based on the stipulated revenues and expenses. RRB also accepts Cal-Am's estimate of Working Cash which is based on prepaid items, deferred maintenance, painting of tanks, and deferred costs related to the Catastrophic Event Memorandum Account.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $2,546.0 $2,221.5 $2,791.1

2001 $2,820.1 $2,279.1 $2,978.0

10.03 Weighted Average Accumulated Depreciation

RRB accepts Cal-Am's factor of 51.69% to calculate Weighted Average Depreciation Reserve. RRB also accepts Cal-Am's methodology of calculating depreciation based on the applicable rate of depreciation for each type of asset.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $33,799.3 $32,509.8 $33,738.8

2001 $36,768.2 $34,501.2 $36,608.4

10.04 Deferred Federal and State Taxes on Income

RRB accepts Cal-Am's estimates based on the stipulated level of expenditures and deferrals for Test Years 2000 and 2001 using Financial Accounting Standard 109 issued by the Financial Accounting Standards Board.

Original Positions (000s) Settlement (000s)

Cal-Am RRB

2000 $7,260.9 $6,935.0 $7,378.9

2001 $7,455.5 $6,964.9 $7,610.7

Table L-1 and Table L-2, attached, set forth the positions of RRB and Cal-Am.

11.00 Design of Rates

11.01 Background

Cal-Am requested that a new design ("Per Capita Design") be implemented in the Monterey Division based on an individual allowance for each customer including factors such as number of people, size of lot, commercial needs, and comparable uses. This design was prepared in response to Order WR 95-10 of the State Water Resource Control Board ("SWRCB") and MPWMD's Ordinance No. 92. SWRCB's Order 95-10 mandates that Cal-Am reduce its production from the Carmel Valley to 11,285 acre feet annually or suffer potentially large fines. Ordinance No. 92 was adopted both to limit production to comply with SWRCB's Order 95-10 and to limit production during the time of physical drought. The main purpose of Cal-Am's proposed design is to take a proactive response to the legal restrictions imposed by SWRCB's Order No. 92 and was the product of an extensive set of public hearings and workshops and the joint product of MPWMD, Cal-Am, and community representatives and organizations.

RRB agrees with the need for and structure of Cal-Am's requested design but wants its implementation deferred until notification to the Commission triggered by Cal-Am's exceeding any month-end goal for its source of supply for the Carmel Valley for the water-year to date. Cal-Am has agreed to that modification.

Pending such notification and implementation of the per capita design, RRB and Cal-Am agree to maintain Cal-Am's existing design with certain modifications. The Parties disagree, however, on Cal-Am's recommended higher blocks for both residential and commercial customers. That issue was litigated before the Commission on September 1 and 2, 1999 and will be submitted to the Commission for resolution upon the filing of concurrent briefs.

11.02 Stipulated Design to be Effective only on Further Notice to the Commission

11.02.01 Implementation of Per Capita Design

The Per Capita Design based on an allotment to each customer would be implemented within ten days of notification by Cal-Am to the Water Division that Cal-Am has as of any month-end exceeded the production goal for the Carmel River Water Resource System (as defined by the MPWMD)for the water-year to date. Once implemented, the Per Capita Design would remain in place for the remainder of that water-year and then revert to the normal design if production from the Carmel River Water Resource System is below the goal for each of the first two months of the succeeding water-year, in which case return to the normal design would be implemented for each bill issued on or after December 1 of the succeeding water-year.

Given the ten days to implement this design, Cal-Am would necessarily have to blitz the Monterey Area with information at an estimated cost, including an individual mailer to each customer, of $140,000. The cost of the effort, up to the $140,000, would be charged to Cal-Am's Conservation Memorandum Account. This cost is in addition to other annual charges as approved for the Memorandum Account described in Section 12.02, below. The following table is a summary of the expected charges:

Television - Produce Spots (2 Commercials) $25,000

Television - Run Spots, 600 Gross Rating Points $40,000

Radio - Produce 3 Spots $ 6,000

Radio Buy - Run Spots $20,000

Newspaper - Produce Ads (3 Different Ads) $ 7,000

Newspaper - Run 3 Ads in 5 Newspapers $12,000

Direct Mail to Customers - Design $ 6,000

Direct Mail to Customers - Printing & Postage $24,000

TOTAL $140,000

11.02.02 Background of the Modified Per Capita Design

Per agreement with RRB, Cal-Am would not implement a modified per capita design until production for the water-year to date from the Carmel River Water Resource System exceeds limits set forth in MPWMD's Ordinance No. 92.

Residential customers are considered to include PAR and Multiresidential Customers. Residential customers in Hidden Hills are excluded from this design. The design for all other customers would be based on criteria established by the Monterey Peninsula Water Management District based on each customer business type and needs for water. These customers would receive an allotment and pay the Standard Rate for all units up to their monthly allotment, and 300% of the Standard Rate for all units over their monthly allotment. A monthly charge would be billed at the full monthly rate for each meter.

11.02.03 Proposed Design

The proposed Per Capita Design is based on the following criteria:

1. A monthly allotment for residential customers is based on the following factors:

Table 1


	Number of People		Units Per Month
1 Person		3
2 People		5
3 People		7
4 People		9
5 People		10
6 People		12
7 People		13
8 People		14
9 People		15
10 People		16
11 People		17
12 People		18
Size of Lot
No Outside Space		0
Less Than ¼ Acre		1
¼ to ½ Acre		2
½ to 1 Acre		3
Greater Than 1 Acre, Less Than 2 Acres		4
Greater Than 2 Acres, Less Than 3 Acres		6
Greater Than 3 Acres, Less Than 4 Acres		8
Greater Than 4 Acres		10
Allotments for Large Animals
Less than 3 Large Animals		1
3 to 5 Large Animals		2
5 to 10 Large Animals		3
10 to 20 Large Animals		4
Over 20 Large Animals		5

The factors in Table 1 would be added to determine the specific allotment for each residential customer. The allotment would not limit the total water that each customer can consume. This allotment would also be modified for usage during summer and winter. The specific factors for the cutoff are determined as shown on Table 2, below. All other customers have an allotment based on historic usage, audits, allocations by the MPWMD, comparisons to like properties, and other factors as necessary.

The total allotment for each customer is divided in half to determine its Equivalent Consumption Units (ECU).

2. The residential design would be as follows:

Table 2

Blocks	Percentage of Standard Rate
1	50%
2	100%
3	150%
4	200%
5	400%

3. The ECU determines the allotment for each block for each customer. For example, a home with 3 people on a one acre lot would have an ECU of 5 (7 plus 3, divided by 2). In this example, the customer would be billed for the first five units at 50%, the next 5 units at the 100%, etc.

4. For Winter, each customer who has an outside space would be allowed only 1 unit of water per month. Winter is defined as November through April.

5. For Summer, each customer who has outside space would be allowed twice its allotment, as determined by its size of lot (per Table 1), less one unit. Summer is defined as May through October. For example, a customer with a lot ½ acre in size could use 3 units (2 times 2, minus 1), in addition to its per capita allotment, without penalty.

6. The method for recovery of the standard monthly Service Charge should not be altered under this proposed design and would still be recovered as per the Stipulated Design in this Settlement.

7. The current tariff for PAR would remain in place. As a result, those qualifying customers would not be billed a monthly Service Charge.

11.03 Stipulated Allocation for Additional Revenue Generated by the Fourth Rate Block if Adopted by the Commission.

The Parties agree that, if a fourth block for residential customers is adopted by the Commission, the expected annual revenue should be offset by a like reduction in another rate. The Parties have estimated that the fourth block would cause the Water Rate Adjustment Mechanism (WRAM) Balancing Account to be over collected by

$700,000 annually and the rate which should be used to reduce the Service Charge Surcharge in the amounts of $0.1822 in 2000, $0.1871 in 2001, and $0.1819 in 2002. Based on the proposed Standard Rates per this Settlement and the adoption of the fourth block for residential customers, the annual Service Charge Surcharge would be $0.60 in 2000, $0.64 in 2001, and $0.69 in 2002.

11.04 Rates

If the Commission adopts the Standard Rates as proposed by the Cal-Am, including the fourth block for residential customers and the second block for commercial customers, the tariffs as set forth in Appendix B should be used. If the Commission adopts the Standard Rates as proposed by RRB, excluding the fourth block for residential customers and the second block for commercial customers, the tariffs as set forth in Appendix C should be used.

12.00 Special Requests

12.01 Special Request # 1 - Design Authorized for the Monterey Division in Decision 96-12-005

RRB and Cal-Am agree that Cal-Am has fulfilled its obligations under Ordering Paragraph 10 of Decision 96-12-005 in which Cal-Am was ordered to show the effects of the new design on residential customers and whether the design promotes conservation.

12.02 Special Request # 2 - Adoption of Ordinance No. 92 as Cal-Am's Plan for Conservation

RRB and Cal-Am agree to the adoption of MPWMD's Ordinance No. 92 as part of Cal-Am's interim program to comply with SWRCB's Order WR95-10. To effectuate the Plan, estimated annual expenditures by Cal-Am includes 1) two employees, 2) employment of an outside contractor for large audits, 3) notifications, 4) advertising, 5) miscellaneous programs, 6) retrofitting of toilet and 7) employment of an outside consultant to perform an audit of Cal-Am's production, transmission, and distribution. Cal-Am and RRB have also agreed on total annual expenditures of $550,000 to be authorized in the Conservation Memorandum Account.

12.03 Special Request # 3 - Memorandum Account for Edangered Species Act

Cal-Am and RRB agree that Cal-Am should be authorized to establish a memorandum account to track expenses incurred to comply with the Endangered Species Act. The memorandum account would become effective on the effective date of this Decision. Estimated expenses for Test Year 2000 are $125,000, and amounts in excess of $125,000 will be included Test Year 2001. Annual expenses could equal $25,000.

12.04 Special Request # 4 - Recovery of Catastrophic Event Memorandum Account

Cal-Am and RRB agree to the recovery in rates in equal amounts in each of the Test Years 1/3 of the total amount accumulated by Cal-Am in its Catastrophic Event Memorandum Account.

12.05 Special Request # 5 - Capitalization of Interest Costs on Emergency Water Treatment Projects

Cal-Am has agreed to RRB's position that it should not accrue Allowance for Funds Used During Construction on the Clearwell Project and the Begonia Iron Removal Plant Renovation Project prior to the date a final decision is effective in this proceeding.

12.06 Special Request # 6 - AFUDC for the San Clemete Dam and the Carmel River Dam Projects

Cal-Am has agreed with RRB not to include any further expenditures related to these two projects in plant in service until they are completed and new rates related to them are approved. The San Clemente Dam Project is to be reviewed under an Advice Letter and the Carmel River Dam Project is the subject of Application 97-03-052. AFUDC at the rate for 90-day commercial paper will continue to be accrued on both of these projects until they are approved in rates.

Cal-Am has informed RRB that the San Clemente Dam Project will not be completed until 2002. Cal-Am should file an Advice Letter at the time of completion as approved in Ordering Paragraph 6c of Decision 89-02-067 and Ordering Paragraph 8 of Decision 93-10-038.

12.07 Special Request # 7 - Recovery of Memorandum Accounts

Cal-Am and RRB agree that Cal-Am should be authorized to transfer actual expenditures accrued to its State Water Resources Control Board Memorandum Account and the Conservation Memorandum Accounts into the Expense Balancing Account or to Plant in Service after all charges to the accounts are finalized at the end of 1999 and audited by RRB.

12.08 Special Request # 8 -Recovery of the WRAM Balancing Account

Cal-Am and RRB agree that the Water Rate Adjustment Mechanism Balancing Account should be continued for the undercollection or overcollection of revenues due to the design of rates for the Monterey Division. RRB and Cal-Am agree that only differences caused by the design should accrue to the account and that differences caused by variations in consumption are not appropriately accrued to the account. Cal-Am must file for recovery of the account when the balance exceeds 5% of gross revenues in the Monterey Division.

12.09 Special Request # 9 - Recovery of the Expense Balancing Account

Cal-Am and RRB agree that a surcharge on all units of water consumed by each customer should be effective July 1, 2000, for recovery of all expenditures approved through Special Request #7. The approved balance should be recovered from customers by a uniform surcharge for 30 months on all units of water sold.

12.10 Special Request # 10 - State Water Resource Control Board Fines

Cal-Am and RRB have agreed that Cal-Am should be allowed to recover any fines imposed by the SWRCB due to overpumping of the Carmel River Water Resources System, but only if the actions taken by Cal-Am that resulted in the fines were reasonable in light of Cal-Am's obligation to serve its customers. Cal-Am will be allowed to file for the memorandum account upon receipt of notice from the SWRCB of an impending fine.

12.11 Special Request #11 - Recovery of Charges Imposed by MPWMD for Conservation and Rationing

MPWMD may impose charges on Cal-Am for expenses incurred to further the effectiveness of Ordinance No. 92 as it pertains to limiting use of water to meet the limits of the SWRCB's Order WR 95-10. Cal-Am will be authorized to establish a memorandum account for charges up to an annual limit of $100,000 imposed by MPWMD.

In the event that rationing becomes necessary in the Monterey Division, Cal-Am may file for and will be entitled to establish a separate Rationing Memorandum Account to accrue all expenses billed to it by the District. RRB and Cal-Am also agree that RRB has the right to review the proposed expenses to be charged to the Rationing Memorandum Account. RRB and Cal-Am also agree that rationing can be declared on short notice by MPWMD and that it could be required to expend funds applicable to Cal-Am's ratepayers on very short notice. In this regard, RRB and Cal-Am agree that Cal-Am should be allowed to accrue expenses to the Rationing Memorandum Account from the date Cal-Am first requests authority to establish this account. Actual charges to the account will be subject to review by RRB.

12.12 Special Request #12 - Memorandum Account for Rationing Expenses

Cal-Am and RRB agree that Cal-Am should be allowed to establish a memorandum account for other expenses related to rationing if rationing is declared in the Monterey Division. RRB and Cal-Am agree that RRB has the right to review the proposed expenses to be charged to the memorandum account. RRB and Cal-Am agree that rationing can be declared on short notice by MPWMD and that Cal-Am could be required to expend funds on very short notice. In this regard, the RRB and Cal-Am agree that Cal-Am should be allowed to accrue expenses to the memorandum account from the date that Cal-Am first requests authority to establish this account. Actual charges to the account will be subject to review by RRB.

12.13 Special Request #13 - Memorandum Account for Expenses of "Plan B"

In accordance with the Resolution W-4131, Cal-Am is authorized to establish a memorandum account to track expenses related to the study of alternatives to Cal-Am's proposed Carmel River Dam. The memorandum account may not exceed $750,000 unless authorized by the Commission.

12.14 Special Request #14 - Memorandum Account for Savings of Subleasing of the Monterey General Office

The Monterey Division leases space for an administration center. Cal-Am has recently consolidated Customer Service in its regional center in Chula Vista which developed some unused space in the Monterey General Office. The Monterey Division is proposing to sublease either a portion or all of its General Office. Cal-Am and RRB agree that Cal-Am should establish a memorandum account to track any savings from subleasing of the Monterey General Office. Savings will be produced if the income exceeds any new expense and the difference between the actual current lease of the current general office and the amount allowed in this Settlement. The annual costs for the General Office per this Settlement are $317,000 in 2000, $245,000 in 2001, and $173,000 in 2002, and are described in Section 6.05, above. Any income greater than 1) any costs of the new office in 2000, 2) $81,700 plus any costs of the new office in 2001, and 3) $173,000 plus any costs of the new office in 2002 will be accumulated in this memorandum account.

RATEPAYER REPRESENTATION BRANCH OF THE WATER DIVISION

By _/s/ SUNG B. HAN ____________
Sung B. Han
Project Manager for Ratepayer Representation Branch of the Water Division

State of California

Public Utilities Commission

505 Van Ness Avenue

San Francisco, CA 94102

(415) 703-1578

Dated: December 8, 1999

CALIFORNIA-AMERICAN WATER COMPANY

By: _/s/ DAVID P. STEPHENSON __
David P. Stephenson
Assistant Treasurer for California-American Water Company

California-American Water Company

880 Kuhn Drive

Chula Vista, CA 91914

(619) 656-2436

Dated: December 7, 1999

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

By _/s/ DAVID C. LAREDO_________
David C. Laredo for Delay & Laredo
Attorney for Monterey Peninsula Water Management District

DeLay & Laredo

606 Forest Avenue

Pacific Grove, CA 93950

(831) 646-1502

Dated: December 8, 1999

DEPARTMENT OF DEFENSE

By: __/s/ DAVID A. MCCORMICK_____
David A. McCormick
Attorney for Department of Defense
on behalf of the Presidio of Monterey

Department of the Army

Office of Judge Advocate General

901 North Stuart Street, Room 713

Arlington, VA 22203-1837

(703) 696-1646

Dated: December 8, 1999

Appendix D (Continued)

Appendix - B

To Settlement (Appendix D)

Rate Structure Section

Including 4^th Tier

(See CPUC formal files for Appendix B

to APPENDIX D of the decision)


APPENDIX A-1				APPENDIX A-1 APPENDIX A-1
PAGE 1 of 7				PAGE 2 of 7 PAGE 3 of 7


CALIFORNIA-AMERICAN WATER COMPANY				AUTHORIZED RATES AND STEP RATE INCREASES AUTHORIZED RATES AND STEP RATE INCREASES
MONTEREY DIVISION				SCHEDULE NO. MO-1 SCHEDULE NO. MO-1
AUTHORIZED RATES AND STEP RATE INCREASES				CALIFORNIA-AMERICAN WATER COMPANY CALIFORNIA-AMERICAN WATER COMPANY
SCHEDULE NO. MO-1				MONTEREY DISTRICT - A.99-04-003 MONTEREY DISTRICT - A.99-04-003


		Step Rate	Step Rate		PAR Customers All Other Customers
	Rates for	Increase	Increase		Authorized Authorized
	2000	01/01/01	01/01/02
						Step Rate	Step Rate			Step Rate	Step Rate
Quantity Rates:					Rates for	Increase	Increase		Rates for	Increase	Increase
					2000	01/01/01	01/01/02		2000	01/01/01	01/01/02
Elevation Surcharge:
Elevation Zone 1, per 100 cu. ft.	$0.1774	$0.00	$0.00	Service Charges:				Service Charges:
Elevation Zone 2, per 100 cu. ft.	$0.4036	$0.00	$0.00
				For 5/8 x 3/4 - inch meter	$0.00	$0.00	$0.00	For 5/8 x 3/4 - inch meter	$12.21	$0.70	$0.81
Residential and PAR Customers:				For 3/4 - inch meter	$0.00	$0.00	$0.00	For 3/4 - inch meter	$18.32	$1.05	$1.22
For the first 800 cu. ft., per 100 cu. ft.	$1.8374	$0.00	$0.00	For 1 - inch meter	$0.00	$0.00	$0.00	For 1 - inch meter	$30.53	$1.75	$2.03
For the next 800 cu. ft., per 100 cu. ft.	$2.4498	$0.00	$0.00	For 1-1/2 - inch meter	$0.00	$0.00	$0.00	For 1-1/2 - inch meter	$61.05	$3.50	$4.05
For the next 1,600 cu. ft., per 100 cu. Ft.	$4.8996	$0.00	$0.00	For 2 - inch meter	$0.00	$0.00	$0.00	For 2 - inch meter	$97.68	$5.60	$6.48
Over 3,200 cu. ft., per 100 cu. ft.	$9.7992	$0.00	$0.00	For 3 - inch meter	$0.00	$0.00	$0.00	For 3 - inch meter	$183.15	$10.50	$12.15
				For 4 - inch meter	$0.00	$0.00	$0.00	For 4 - inch meter	$305.25	$17.50	$20.25
Service Charge Surcharge, per 100 cu. ft:	$0.6000	$0.04	$0.05	For 6 - inch meter	$0.00	$0.00	$0.00	For 6 - inch meter	$610.50	$35.00	$40.50

Multi-Residential Customers (per dwelling unit):
For the first 400 cu. ft., per 100 cu. ft.	$1.8374	$0.00	$0.00
For the next 400 cu. ft., per 100 cu. ft.	$2.4498	$0.00	$0.00
For the next 400 cu. ft., per 100 cu. ft.	$4.8996	$0.00	$0.00
Over 1,200 cu. ft., per 100 cu. ft.	$9.7992	$0.00	$0.00

Service Charge Surcharge, per 100 cu. ft:	$0.6000	$0.04	$0.05
					Authorized
Other Special Use Customers:
For all water delivered, per 100 cu. ft.	$3.6747	$0.00	$0.00			Step Rate	Step Rate
					Rates for	Increase	Increase
					2000	01/01/01	01/01/02
All Other Customers:
For all units delivered up to monthly allotment				Service Charges:
Per 100 cu. ft.	$2.4498	$0.00	$0.00
For all units delivered over monthly allotment Per 100 cu. ft.	$4.8996	$0.00	$0.00


APPENDIX B
PAGE 1 OF 5


CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

BILL COMPARISON
TEST YEAR 2000, and 2001 & 2002 Step Increases



	Comparison of typical bills for residential metered customers (in Elevation Zone 1) of various usage levels and average level at present and authorized rates for 2000, 2001, and 2002.


	PUC Reimbursement Surcharge is not included in these figures.


General Metered Service
(5/8 x 3/4-inch meters)


Monthly			2000		2001		2002
Usage		Present	Authorized	Percent	Authorized	Percent	Authorized	Percent
(cubic feet)		Rates	Rates	Increase	Step Rates	Increase	Step Rates	Increase

0		$5.92	$6.11	3.2%	$6.46	5.7%	$6.87	6.3%

500		$20.03	$19.18	-4.2%	$19.73	2.9%	$20.39	3.3%

794	(avg.)	$28.33	$26.87	-5.2%	$27.54	2.5%	$28.35	2.9%

1000		$35.37	$33.48	-5.3%	$34.23	2.2%	$35.14	2.7%

2000		$79.52	$75.55	-5.0%	$76.70	1.5%	$78.11	1.8%

3000		$138.37	$132.32	-4.4%	$133.87	1.2%	$135.78	1.4%

5000		$256.07	$334.06	30.5%	$336.41	0.7%	$339.32	0.9%

10000		$550.32	$862.89	56.8%	$867.24	0.5%	$872.65	0.6%


APPENDIX B
PAGE 2 OF 5


CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

BILL COMPARISON
TEST YEAR 2000, and 2001 & 2002 Step Increases



	Comparison of typical bills for a multi-residential metered customer with 5 dwelling units (in Elevation Zone 1) at various usage levels at present and authorized rates for the test years 2000, 2001, and 2002.


	PUC Reimbursement Surcharge is not included in these figures.


General Metered Service
(1-inch meters)


Monthly			2000		2001		2002
Usage		Present	Authorized	Percent	Authorized	Percent	Authorized	Percent
(cubic feet)		Rates	Rates	Increase	Step Rates	Increase	Step Rates	Increase

0		$14.79	$15.26	3.2%	$16.13	5.7%	$17.15	6.3%

500		$24.53	$28.33	15.5%	$29.40	3.8%	$30.67	4.3%

1000		$34.26	$41.41	20.9%	$42.68	3.1%	$44.20	3.6%

2000		$53.74	$67.56	25.7%	$69.23	2.5%	$71.25	2.9%

3000		$73.21	$99.83	36.4%	$101.90	2.1%	$104.42	2.5%

5000		$112.16	$188.87	68.4%	$191.74	1.5%	$195.26	1.8%

10000		$209.52	$668.70	219.2%	$673.57	0.7%	$679.59	0.9%


APPENDIX B
PAGE 3 OF 5


CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

BILL COMPARISON
TEST YEAR 2000, and 2001 & 2002 Step Increases



	Comparison of typical bills for PAR residential metered customers (in Elevation Zone 1) of various usage levels and average level at present and authorized rates for the test years 2000, 2001, and 2002.


	PUC Reimbursement Surcharge is not included in these figures.


General Metered Service
(5/8 x 3/4-inch meters)


Monthly			2000		2001		2002
Usage		Present	Authorized	Percent	Authorized	Percent	Authorized	Percent
(cubic feet)		Rates	Rates	Increase	Step Rates	Increase	Step Rates	Increase

0		$0.00	$0.00	0.0%	$0.00	0.0%	$0.00	0.0%

500		$14.11	$13.07	-7.4%	$13.27	1.5%	$13.52	1.9%

604	(avg.)	$17.05	$15.79	-7.4%	$16.03	1.5%	$16.34	1.9%

1000		$29.45	$27.37	-7.1%	$27.77	1.5%	$28.27	1.8%

2000		$73.60	$69.44	-5.7%	$70.24	1.2%	$71.24	1.4%

3000		$132.45	$126.21	-4.7%	$127.41	1.0%	$128.91	1.2%

5000		$250.15	$327.95	31.1%	$329.95	0.6%	$332.45	0.8%

10000		$544.40	$856.78	57.4%	$860.78	0.5%	$865.78	0.6%


APPENDIX B
PAGE 4 OF 5


CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

BILL COMPARISON
TEST YEAR 2000, and 2001 & 2002 Step Increases



	Comparison of typical bills for Hidden Hills residential metered customers (in Elevation Zone 2) of various usage levels and average level at present and authorized rates for the test years 2000, 2001, and 2002.


	PUC Reimbursement Surcharge is not included in these figures.


General Metered Service
(5/8 x 3/4-inch meters)


Monthly			2000		2001		2002
Usage		Present	Authorized	Percent	Authorized	Percent	Authorized	Percent
(cubic feet)		Rates	Rates	Increase	Step Rates	Increase	Step Rates	Increase

0		$5.92	$6.11	3.2%	$6.46	5.7%	$6.87	6.3%

500		$21.02	$21.23	1.0%	$21.80	2.7%	$22.43	2.9%

1000		$37.34	$37.57	0.6%	$38.37	2.1%	$39.22	2.2%

1501	(avg.)	$55.54	$55.78	0.4%	$56.81	1.8%	$57.89	1.9%

2000		$73.67	$73.92	0.3%	$75.17	1.7%	$76.48	1.7%

3000		$109.99	$110.28	0.3%	$111.98	1.5%	$113.73	1.6%

5000		$231.64	$231.99	0.2%	$234.58	1.1%	$237.23	1.1%

10000		$535.75	$536.26	0.1%	$541.10	0.9%	$545.99	0.9%


APPENDIX B
PAGE 5 OF 5


CALIFORNIA-AMERICAN WATER COMPANY
MONTEREY DISTRICT

BILL COMPARISON
TEST YEAR 2000, and 2001 & 2002 Step Increases



	Comparison of typical bills for Ryan Ranch residential metered customers (in Elevation Zone 2) of various usage levels and average level at present and authorized rates for the test years 2000, 2001, and 2002.


	PUC Reimbursement Surcharge is not included in these figures.


General Metered Service
(2-inch meters)


Monthly			2000		2001		2002
Usage		Present	Authorized	Percent	Authorized	Percent	Authorized	Percent
(cubic feet)		Rates	Rates	Increase	Step Rates	Increase	Step Rates	Increase

0		$47.32	$48.84	3.2%	$51.64	5.7%	$54.88	6.3%

500		$61.10	$63.96	4.7%	$66.98	4.7%	$70.44	5.2%

1000		$74.89	$80.30	7.2%	$83.55	4.0%	$87.23	4.4%

1875	(avg.)	$99.01	$112.11	13.2%	$115.75	3.2%	$119.83	3.5%

2000		$102.46	$116.65	13.9%	$120.35	3.2%	$124.49	3.4%

3000		$130.03	$153.01	17.7%	$157.16	2.7%	$161.74	2.9%

5000		$185.17	$274.72	48.4%	$279.76	1.8%	$285.24	2.0%

10000		$323.01	$578.99	79.2%	$586.28	1.3%	$594.00	1.3%




5. WATER CONSUMPTION
		2000			2001
		Usage	Consumption		Usage	Consumption
Classification	Services	(Ccf/Cust.)	(kCcf)	Services	(Ccf/Cust.)	(kCcf)

Metered Service
Residential	31,204	95.3	2,973.7	31,206	95.3	2,973.9
PAR Customers	246	72.5	17.8	246	72.4	17.8
Multi-Residential	1,409	543.3	765.5	1,409	543.3	765.5
Commercial	3,017	474.5	1,431.6	3,017	474.5	1,431.6
Hidden Hills	368	180.1	66.3	368	180.1	66.3
Ryan Ranch	120	225.0	27.0	123	225.0	27.7
Industrial	6	8,318.8	49.9	6	8,318.8	49.9
Public Authority	474	1,155.5	547.7	474	1,155.5	547.7
Golf Course	12	10,675.8	128.1	12	10,675.8	128.1
Viscaino Reclamation Tank	1	25,000.0	25.0	1	25,000.0	25.0
Sale for Resale	1	3,614.0	3.6	1	3,614.0	3.6
Other	0	0.0	0.0	0	0.0	0.0
Construction	20	833.1	16.7	20	833.1	16.7
Subtotal	36,878		6,052.9	36,883		6,053.8
Non-Domestic Fire Service	2		0	2		0
Private Fire Hydrants	719		0	719		0
Public Fire Hydrants	13		0	13		0
Total Connections	37,612			37,617
Unaccounted Water, kCcf (8.2%)			540.8			540.8
Other			0.9			0.9
Total Water Produced			6,594.6			6,595.5


Total Water Production			6,594.6			6,595.5
Surface Water (kCcf)			1,045.2			1,045.4
Well Water (kCcf)			5,549.3			5,550.1

Comments on Proposed Decision, and CalAm's Motion to Reduce Waiting Period

RESIDENTIAL CUSTOMERS

USAGE

RESIDENTIAL MONTHLY WATER ALLOTMENT & RATES DETERMINATION

TEST YEARS 2000 & 2001

TEST YEARS 2000 & 2001