Background

Peerless is a small Class B, privately held water company organized under the laws of California on August 12, 1940. Peerless has remained a small, family owned and operated water utility since its inception. The company was started by J. William Zastrow's father to serve approximately 150 houses that had been denied service by the neighboring utility, Bellflower Somerset Mutual Water Company (Bellflower Somerset). Peerless then expanded as developers constructed residential tract homes in the surrounding area. After Zastrow's father died in 1959, his mother operated the company. By 1961, the Company had reached its present size of approximately 2,000 customers. This customer base is not expected to increase in the future.

In 1970, J. William Zastrow became the President of Peerless. Currently, Peerless has five employees, including Zastrow and his son. Zastrow and his wife are the sole shareholders in the company. They jointly hold 54,301 shares of stock.

Peerless serves portions of the cities of Bellflower, Lakewood and Paramount in Los Angeles County. The majority of Peerless customers are residential. The business office is located at 16913 Lakewood Boulevard, Bellflower. Peerless' operating system is spread among eight unconnected service territories supplied by wells. In 1999, Peerless delivered 360,683 cubic feet of water (including 11,629 cubic feet of reclaimed water).

Peerless' operating revenues for 1998 were approximately $800,000; for 1999 these revenues increased to $949,216. While the company technically is a small Class B water utility, the Commission often views it as a Class C water utility, as evidenced by the current permitted rate of return on equity (ROE), which is consistent with the ROE authorized for Class C water utilities.

In addition to the water distribution system infrastructure, Peerless owns significant water rights and several parcels of land.