1. Settled Issues Approved in this Decision

The majority of the issues in this proceeding were settled among various parties and are contained in three separate partial settlement agreements presented to the Commission for adoption. This decision grants in part and denies in part each of the three joint motions for adoption of the partial settlement agreements. The Division of Ratepayer Advocates (DRA) and Mark West Community Services Committee (Mark West) filed comments on the settlement between California-American Water Company (Cal-Am) and the Natural Resources Defense Council (NRDC). Mark West also filed comments on the settlement between Cal-Am, DRA and The Utility Reform Network (TURN).

A more complete description of each of the settlements, a list of the signatories to each settlement and parties' comments on the settlements are contained in Attachment B to this decision.

The settled issues we approve in this decision include:

· Customers, Water Consumption and Revenues;

· Operations and Maintenance Expense;

· General Office Revenue Requirement;

· Most Administrative and General Expenses;

· Conservation Program Budgets;

· Ad Valorem, Payroll and Franchise Tax;

· Utility Plant in Service;

· Special Requests (29 of 36 were settled or withdrawn);

· Low-Income Ratepayer Assistance Program in the Monterey County District;

· Low-income tariff consolidation; and,

· Non-revenue water action plans.

This decision adopts the majority of the settled issues, with the exceptions listed below. A more detailed discussion of the approved settlement issues is contained in section 6.