Conclusions of Law

1. The rate increases authorized in this order are justified and the resulting rates are reasonable.

2. The modified conservation rate design proposed by CalAm and set forth in Appendix A to this order, the rates they would produce, and the implementation criteria CalAm proposes, are in the public interest and should be approved.

3. CalAm should refund to customers on Tariff Schedule MO-1 the WRAM balance related directly to the conservation rate increases we ordered in D.04-07-035.

4. This decision should be made effective immediately to make the water conservation rate structure it authorizes available as soon as possible.

ORDER

IT IS ORDERED that:

1. If at any time before September 30, 2005 production for the water year to date from California-American Water Company's (CalAm) Carmel River resource system has reached a level projected to cause production for the entire water year to exceed that allowed under State Water Resources Control Board Order WR 95-10 as modified by Order WR 98-04, CalAm is authorized to file in accordance with General Order 96 and make effective on five days' notice a revised Tariff Schedule MO-1. The revised schedule shall follow the rate structure pattern on the sample Tariff Schedule MO-1 sheet included as Appendix A to this order, and shall reflect any other Commission-authorized rate changes to that schedule occurring after January 1, 2005 while maintaining the same allotments and block-to-block rate multiples as shown in Appendix A. The revised schedule shall apply to service rendered between its effective date and October 31, 2005, unless sooner revised, extended or canceled. On November 1, 2005, CalAm shall return to the rate structure and rates that would otherwise have been in effect absent this change.

2. In determining for purposes of Ordering Paragraph 1 whether production has reached a level projected to cause production for the entire water year to exceed that allowed under State Water Resources Control Board Order WR 95-10 as modified by Order WR 98-04, CalAm shall apply the criteria set forth in the body of this order.

3. CalAm shall refund to customers receiving service under Monterey District Tariff Schedule MO-1 the balance in its Water Revenue Adjustment Mechanism account (WRAM) related to the conservation rates authorized in Decision (D.) 04-07-035. The refund shall be in the form of a one-time customer bill credit consisting of: (a) one-half of the total D.04-07-035 WRAM collections distributed to current customers who paid those amounts, to be divided among them in proportion to the amount of the collections each paid; and (b) one-half of the total D.04-07-035 WRAM collections distributed to all current customers based on meter size.

4. Application 04-10-037 is closed.

This order is effective today.

Dated March 17, 2005, at San Francisco, California.

Schedule No. MO-1

Monterey District Tariff Area

GENERAL METERED SERVICE

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