D. Discussion of the Settlement
1. Standard of Review for Settlements
We review this settlement pursuant to Rule 51.1(e), which provides that, prior to approval, the Commission must find a settlement "reasonable in light of the whole record, consistent with the law, and in the public interest." The settlement is uncontested.
In comments on the proposed decision, LWWDAC raised concerns that Cal-Am was proceeding with the development of the Larkfield Well No. 6 project in a manner that violated Section 15.3 of the proposed settlement. The parties subsequently modified Section 15.3 to remove Well No. 6 from consideration in this proceeding. The result of this modification is to (1) remove $275,000 in preliminary development costs from rate base and (2) not establish a memorandum account for the project. In the modified settlement, Cal-Am commits to continue its regularly scheduled meetings with Larkfield community representatives regarding water issues. Revised rate schedules for the Larkfield District should be filed by the settlement parties within 5 days of this decision.
2. Reasonable in Light of the Whole Record
We find the modified settlement is reasonable in light of the whole record. All parties participated in discovery, and Cal-Am and ORA served direct and rebuttal testimony prior to entering settlement discussions. The first proposed settlement was also examined through cross-examination at the hearings, and then modified by the parties after further settlement discussions. Each section of the settlement references the evidence submitted on the issue. The settlement clearly reflects compromise achieved among diverse interests vigorously represented at the bargaining table.
3. Consistent with the Law
Consistent with Commission case law, the modified settlement specifically states that the settlement should not be construed as a precedent or statement of policy of any kind. No term of the settlement contravenes statutory provisions or prior Commission decisions.10
4. In the Public Interest
We find that the modified settlement is in the public interest as it represents a reasonable compromise of the settlement parties' respective positions on individual issues and taken as a whole is fair and reasonable. The parties have avoided considerable litigation costs and uncertainty by entering a settlement. The settlement is detailed regarding all of its provisions, so that we may carry out our future regulatory obligations with respect to the utility.
5. Conclusion
Based on the discussion above, we find the modified settlement to be reasonable in light of the whole record, consistent with the law, and in the public interest. Therefore, we should adopt the settlement.
10 We note that Cal-Am did not renew its request in this proceeding to recover in rates an amount attributed to the contamination litigation memorandum account of Cal-Am's predecessor for these districts, namely, Citizens Utilities. In D.04-05-023, the Commission declined to adopt Cal-Am's special rate request #2, to recover $559,462 in that account. In our denial, we required Cal-Am to make a specific showing if it decided to renew its request in its next GRC that the $559,462 was part of the $93.957 million net book value of Citizens' California assets and not part of the $64.553 million acquisition premium already accounted for in rates.
