7. Assignment of Proceeding

John A. Bohn is the assigned Commissioner and Amy C. Yip-Kikugawa is the assigned Administrative Law Judge in this proceeding.

1. The proposed sale is in the public interest because Toro customers would receive numerous benefits if Toro were acquired by CalAm Water.

2. The proposed sale of Toro to CalAm Water will not result in a direct or reasonably foreseeable indirect physical change in the environment.

3. CalAm Water and DRA have agreed to settle the disputed ratemaking issues in this case.

4. The settlement agreement between CalAm Water and DRA is the product of negotiations between the settling parties and constitutes a compromise of the parties' positions.

5. The settlement agreement contains sufficient information to permit the Commission to discharge its regulatory obligations with respect to the parties and their interests.

6. Addressing the ratemaking issues in this case would unnecessarily consume valuable resources of the Commission and other parties, especially since CalAm Water will be filing its 2008 general rate case application for the Monterey District in January 2008.

1. Pursuant to § 15060(c)(2) of the CEQA Guidelines, the proposed sale and transfer of Toro to CalAm Water is not subject to CEQA, as it will not result in a direct or reasonably foreseeable indirect physical change in the environment.

2. Consistent with § 851, the sale of Toro to CalAm Water is in the public interest and should be authorized.

3. The settlement agreement between CalAm Water and DRA resolves all disputed issues in this proceeding.

4. The settlement agreement between CalAm Water and DRA is reasonable in light of the whole record, consistent with law, and in the public interest.

5. The settlement agreement between CalAm Water and DRA should be approved.

6. CalAm Water's request to implement the proposed rates found in Attachment 1 of the Settlement through the advice letter process should be granted.

7. CalAm Water's request for authority to establish a memorandum account to record up to $40,000 of the depreciation, carrying costs and earned interests associated with the wellhead improvements should be granted.

8. CalAm Water and DRA's request to waive the requirements of Rule 12.1(b) should be granted.

9. This proceeding should be closed.

ORDER

IT IS ORDERED that:

1. California American Water Company (CalAm Water) and John W. Richardson & Associates, Court-Appointed Receiver for Toro Water Service, Inc. (Receiver) are authorized to sell and convey the real property, water system assets, and other assets of Toro Water Service, Inc. pursuant to Pub. Util. Code § 851.

2. The settlement agreement between CalAm Water and the Division of Ratepayer Advocates (DRA), included as Attachment A of this decision, is approved.

3. CalAm Water is authorized to implement the proposed rates presented in Attachment 1 of the settlement agreement through the advice letter process once it has acquired legal title and possession of Toro.

4. CalAm Water is authorized to establish a memorandum account to record the depreciation, carrying costs and earned interests, up to $40,000, associated with wellhead improvements.

5. CalAm Water and DRA's request to waive the requirements of Rule 12.1(b) is granted.

6. Application 07-02-008 is closed.

This order is effective today.

Dated November 16, 2007, at San Francisco, California.

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