2. Procedural History

SJWC filed this general rate case (GRC) application pursuant to Pub. Util. Code § 454,¹ which governs proposed rate changes. On July 1, 2003, ORA filed a protest to the application. Also, on June 30, 2003, the assigned Administrative Law Judge (ALJ) received a telephone call from VTA's attorney who indicated that VTA would be participating on an issue related to the cost of relocating water mains. A Prehearing Conference (PHC) was held on August 22, 2003. Among other things, the protest, scope of the proceeding, procedural schedule and SJWC's request for interim rates were discussed. Appearances were taken for representatives of SJWC, ORA and VTA.

The Assigned Commissioner's Scoping Memo and Ruling was issued on September 12, 2003. That ruling set forth the scope, schedule, category, assignment of the principal hearing officer and ex parte communications rules for this proceeding, pursuant to Rule 6.3 of the Commission's Rules of Practice and Procedure (Rules).

On September 26, 2003, VTA filed a preliminary brief and report to clarify the substance of, and the authority for, its request to have ratepayers fund certain pipeline relocation project costs incurred by VTA in the construction of its light rail transit system. Responses were filed by SJWC and ORA on October 3, 2003.

On October 9, 2003, an ALJ ruling granted the request of the County of Santa Clara to intervene as an interested party.

In lieu of public participation hearings, a notice requesting public comment was sent to all SJWC customers, either through a bill insert or special mailing.² The proposed increase, the effect on customers and the Commission process for implementing rate changes were described in the notice. Input on any aspect of the company's operations, proposed rate increases, quality of service or other concerns was solicited. Approximately 130 letters or e-mails were received by the Commission's Public Advisor's Office and distributed to the Commissioners, the assigned ALJ, ORA and other Commission staff.

Topics addressed in the customers' comments include the large size of the proposed increases when compared to inflation, the frequency of rate increases, the effect of high rates on the quality of life, the apparent anti-conservation rate design (the percent increase is reduced when more water is consumed), the poor quality of the water, support for gray water systems, lower rates in neighboring communities, and insistence that SJWC should make visible and substantial sacrifices to share in the burden of harsh economic times.

On November 17, 2003, ORA and VTA issued testimony addressing SJWC's request. On December 8, 2003, SJWC issued its rebuttal testimony.

On December 4, 2003, the Commission issued Decision 03-12-007, which granted SJWC interim rates, effective January 1, 2004, pursuant to the provisions of § 455.2.

On December 29, 2003, ORA filed a motion to dismiss VTA's request. As discussed later in this decision, a January 29, 2004 ALJ ruling denied ORA's motion, in part.

On January 26, 2004, SJWC and ORA filed a joint motion to adopt a settlement. The settlement reconciled all issues between the two parties. On February 3, 2004, an evidentiary hearing was held to address the settlement document. On March 8, 2004, revised pages to the settlement were submitted.

On February 25, 2004 evidentiary hearing on VTA's request was held. Opening briefs on this issue were filed on March 30, 2004. Reply briefs were filed on April 6, 2004, at which time this matter was submitted for decision.