2. Procedural History

Del Oro filed this application after four Lime Saddle District customers brought suit against the utility in Butte County Superior Court. Plaintiffs contest the main extension agreements that Del Oro required them to sign beginning in 1991 in order to receive water service. Pursuant to Section A.8 of its Tariff Rule 15, Del Oro asked this Commission to rule on the validity of these main extension agreements. Section A.8 states:

In case of disagreement or dispute regarding the application of any provision of this rule, or in circumstances where the application of this rule appears unreasonable to either party, the utility, applicant or applicants may refer the matter to the Commission for determination.

Protests to the application were filed by Breuer, Inc. (Breuer), a development corporation, and by two other developers and one couple, all of whom are the plaintiffs in the Superior Court lawsuits. The Superior Court consolidated these cases and granted a stay pending the Commission's consideration of this application.

The Commission conducted a prehearing conference on March 28, 2001, at which time it was determined that the Commission's Water Division was preparing an audit and a report on Del Oro's main extension agreements as part of a general rate case for the utility. A second prehearing conference was conducted on June 6, 2001, after the audit and staff report were issued. In a Scoping Memo issued on June 12, 2001, Assigned Commissioner Duque set dates for submission of written testimony and scheduled an evidentiary hearing for August 21-24, 2001. Commissioner Duque limited the scope of this proceeding to two issues:

1. Were the Main Extension Agreements in question issued in compliance with Tariff Rule 15 and the Commission's rules and regulations?

2. Have Del Oro Water Company and its Lime Saddle District properly accounted for funds collected through the Main Extension Agreements in question?

The hearing was conducted on August 21 and 22, 2001. Protestants elected not to present testimony and proceeded solely on cross-examination of applicant's two witnesses and the Water Division's two witnesses. The Water Division witnesses were represented at hearing by the Office of Ratepayer Advocates (ORA). Opening briefs were filed by Del Oro and by Breuer on October 24, 2001, and reply briefs were filed on November 7, 2001, at which time the matter was deemed submitted for Commission decision.