ALJ/DUG/smj Date of Issuance 5/27/2009

Decision 09-05-025 May 21, 2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Golden State Water Company on behalf of its Bear Valley Electric Service Division (U913E), for Approval of a Power Purchase Agreement with Shell Energy North America (US) L.P.

Application 08-08-021 (Filed August 27, 2008)

DECISION ON THE APPLICATION FOR APPROVAL OF A POWER PURCHASE AGREEMENT FOR THE GOLDEN STATE WATER COMPANY BEAR VALLEY ELECTRIC DISTRICT WITH SHELL ENERGY NORTH AMERICA (US) L.P.

1. Summary

Golden State Water Company, on behalf of its Bear Valley Electric Service Division (Bear Valley), filed for advanced approval of the terms and conditions of a proposed Power Purchase Agreement (agreement) with Shell Energy North America (US) L.P. (Shell).  The application was amended on November 10, 2008, upon execution of transactions between Bear Valley and Shell which were included only as proposals in the original application. This decision finds
Bear Valley is still subject to an existing ratemaking settlement agreement adopted in Decision (D.) 02-07-041 which included a cost cap to be in effect until the earliest of either August 31, 2011 or certain other conditions are met; therefore, subject to the ratemaking settlement, the agreement is recoverable in rates without further review through August 31, 2011. We approve the remainder of the contract cost recovery after August 31, 2011 although Bear Valley must exercise prudent administration of the contract over its life. This decision also grants Bear Valley's additional request to create a memorandum account to record unrealized gains and losses on the Shell Agreement. The amended application was unopposed. This proceeding is closed.