2. Procedural Background
On February 6, 2007, CalAm Water and John W. Richardson, in his capacity as the appointed Receiver in United States of America v. Alisal Water Corporation et al. (Case No. C97-20099 JF (EAI)), requested approval from the Commission of the acquisition of the assets of Toro Water Service, Inc. (Toro) by CalAm Water pursuant to Pub. Util. Code § 851. In an April 13, 2004 federal court order, the Receiver was directed to sell the Toro assets to CalAm Water for $408,000 pending Commission approval. The federal court concluded the proposed sale and transfer was in the public interest and that the sales price was commensurate with the fair market value of the system. The Receiver was directed to complete the transaction as soon as practicable.
The application also sought Commission authorization for the following:
1. Merge all of Toro's utility assets and service into CalAm Water's Monterey District and combine the operations, rate base and tariffs of Toro and CalAm Water's Monterey District.
2. Invest in system improvements to bring Toro up to CalAm Water standards, including $738,000 to address the arsenic impacted well(s) currently owned by and located in the Toro Water System.
3. Increase Toro's rate base to reflect the fair market value of the system and the expected costs for treating the arsenic impaired well(s).
4. Implement a phased-in increase in customer rates to recover the expected costs and increase in rate base.
DRA filed a protest on March 19, 2007. DRA indicated that while it did not oppose the proposed sale and transfer of Toro to CalAm Water, it did oppose the proposed ratemaking treatment. CalAm Water filed a response on March 29, 2007.
A prehearing conference (PHC) was held on July 3, 2007. At the PHC, DRA repeated its objection to the requested rate increase and recovery of the arsenic treatment plant on the grounds that they should be considered as part of CalAm Water's 2008 general rate case (GRC) application for the Monterey District. The assigned Administrative Law Judge (ALJ) also questioned whether it was an efficient use of parties' and the Commission's resources to consider permanent rates for Toro in this proceeding given the GRC application for the Monterey District would be filed in January 2008. CalAm Water and DRA requested an opportunity to meet and discuss potential settlement of the ratemaking issues.
On July 27, 2007, a telephonic status conference was held. DRA and CalAm Water informed the assigned ALJ that they had almost reached agreement on all disputed issues and requested additional time to finalize the agreement.
On September 26, 2007, CalAm Water and DRA filed a motion for approval and adoption of a proposed settlement agreement (Settlement), which resolved all disputed ratemaking issues.
A telephonic PHC was held on October 10, 2007 to determine whether any further proceedings were necessary before submission of this matter. The telephonic PHC was summarized in an October 11, 2007 ALJ Ruling.
The proceeding was submitted on October 16, 2007.
