2. Background

Park Water Company (Park) wholly-owns and operates Apple Valley Ranchos Water Company (Ranchos). Both are Class A water utilities regulated by the California Public Utilities Commission. Western Water Holdings LLC, PWC Merger Sub, Inc. (Merger Sub), Park and Ranchos (collectively Applicants) filed this joint application seeking Commission authorization for Merger Sub to merge with and into Park, and for Western Water Holdings LLC to thereby acquire and control, directly or indirectly, Park and Ranchos (the Transaction). Both Merger Sub and Western Water Holdings LLC are wholly-owned subsidiaries of Carlyle Infrastructure Partners Western Water L.P. (CIP Western Water), which is wholly-owned by a group of investment fund vehicles associated with Carlyle Infrastructure Partners L.P. (collectively Carlyle Infrastructure). (Application at 1.)¹ Park will be the surving entity post-merger as a wholly-owned subsidiary of Western Water Holdings LLC, which will own 100% of the outstanding stock of Park. Park will continue to won Ranchos. (Application 2, 10.) As further explained in the application, this transfer is intended to provide an orderly transition from the close control of Park by an individual, Mr. Henry Wheeler, to a new owner, Western Water Holdings LLC. As used in this decision, these various related acquiring entities are referred to collectively as "Carlyle."

As discussed further in today's decision, the Commission's Division of Ratepayer Advocates (DRA) reviewed the transaction and entered into a proposed settlement with the Applicants. There is no other testimony, evidence, or filing offered by DRA except for the proposed settlement and DRA's initial protest.

The Town of Apple Valley (Town) also protested the application and filed comments on the proposed settlement. As a result, we investigated whether the proposed transfer of Ranchos, which serves Town, would place at risk of impairment or loss valuable water rights held by Ranchos. The security and preservation of those rights is discussed further, below. Town also expressed concern whether Carlyle, as the new owner, would provide adequate infrastructure investment for Ranchos to provide safe and reliable service. We discuss this concern below.

Several additional entities filed protests and were consequently granted party status. They did not participate in the settlement conference required by our rules when Applicants and DRA noticed a proposed settlement and did not file comments on the motion for the adoption of the settlement although they remain on the service list as parties.

¹ The application further says that Carlyle Infrastructure Partners, L.P., "and the associated investment fund vehicles that together comprise Carlyle Infrastructure [are all] privately held Delaware limited partnerships." (Application at 6.)