8. Background of Cal-Am's Service Territory

The Commission regulates water service provided by Class A water utilities pursuant to Article XII of the California Constitution and the Public Utilities Code.⁵⁹ For Class A water utilities, Pub. Util. Code § 455.2, as implemented in D.04-06-018 and updated in D.07-05-062, provides for a general rate case proceeding every three years. Cal-Am is a Class A water company with six districts: Larkfield District, Los Angeles County District, Monterey County District, Sacramento District, San Diego County District, and Ventura County District.

8.1. Larkfield District

The Larkfield Water Company was constructed and granted a certificate of public convenience and necessity in 1959. It was merged into Citizens Utilities Company of California (Citizens) in 1995, which was then acquired by American Water Works, Inc., Cal-Am's parent company, in 2002.⁶⁰ The Larkfield District provides water service to an unincorporated portion of Sonoma County about four miles north of the City of Santa Rosa, California. The service area includes the Larkfield and Wikiup subdivisions which lie along the eastern boundary of U.S. Highway 101 and the community of Fulton which is located west of U.S. Highway 101. An interconnected distribution system serves the three areas of the district which provides water to approximately 2,400 customers. The mix of water provided to Larkfield District customers consists of well water and water purchased from the Sonoma County Water Agency.

8.2. Los Angeles County District

There are approximately 28,000 customers in the Los Angeles District. The district has three physically separated subsystems, San Marino, Duarte and Baldwin Hills. The San Marino service area, which is the largest, is ten miles northeast of downtown Los Angeles in the San Gabriel Valley. The Duarte subsystem is adjacent to the San Marino subsystem. The Baldwin Hills service area is centrally located in an unincorporated area of Los Angeles County southwest of downtown Los Angeles and just a few miles east of the Los Angeles International Airport.

The district is served by wells and irrigation water utilizing Cal-Am's groundwater rights and by purchases from municipal wholesalers. The San Marino and Duarte subsystems use primarily groundwater while the Baldwin Hills subsystem uses approximately 50% purchased water from the Metropolitan Water District and the West Basin Municipal Water District.

8.3. Monterey County District

In 1882 the Pacific Improvement Company supplied water to the Del Monte Hotel. In 1905 it was renamed the Monterey County Water Works. In 1915, it was purchased along with 7000 thousand acres of land by a group of investors. After another sale in 1930, it was purchased by California Water and Telephone Company in 1935. Cal-Am's parent company, American Water Works Company, Inc., acquired it in 1966.

The Monterey County District serves approximately 43,000 customers in Carmel-by-the-Sea, Pacific Grove, Monterey, Seaside, Sand City, Del Rey Oaks, and the county areas of the Carmel Valley and the Highway 68 corridor. Water supply in the area is affected by rainfall and various regulations and court orders that restrict Cal-Am's ability to withdraw water from the Carmel River and nearby shallow wells. Efforts to address the current and long-term water supply deficit in the Monterey County District are ongoing.

8.4. Sacramento District

In 1928 the North Sacramento Light and Water Company was purchased by Public Utilities California Corporation. The name was changed to Citizens Utilities Company of California (Citizens) in 1949. Over the years, through a series of mergers and acquisitions, Citizens grew to encompass the ten distinct water systems that now comprise the Sacramento District.

In January 2002 Cal-Am's parent company, American Water Works, Inc., acquired Citizens. The Sacramento District provides water service to areas North, East and South of the City of Sacramento. It also includes an area west of the City of Roseville in Placer County and the smaller communities of Isleton and Walnut Grove located southwest of the City of Sacramento. The ten water systems are now operated as one. The ten systems are Antelope, Arden, Isleton, Lincoln Oaks, Parkway, Rosemont, Security, Suburban, Walnut Grove and West Placer. The Sacramento District serves approximately 57,000 customers.

8.5. San Diego County District

In 1886 the San Diego County District was established for the purpose of supplying water to the residents of the area known today as the City of Coronado. American Water Works acquired the company in 1966. Cal-Am is a wholly owned subsidiary of American Water Works. The San Diego County District serves the Cities of Coronado and Imperial Beach, a portion of the City of San Diego lying south of San Diego Bay and a small area of South Chula Vista located in the County of San Diego. All of the water provided to the San Diego District's approximately 21,000 customers is purchased from the City of San Diego.

8.6. Ventura County District

The Ventura County District was established to serve land developers in the Conejo Valley. It was acquired by Cal-Am in 1967. Between 1970 and 2006 the number of customers in the Ventura County District grew from approximately 7,200 to slightly less than 21,000 with the completion of several new developments in the area. With the increase in customers, the amount and quality of water the district was able to supply to its customers from local wells became inadequate. In 1974, the use of local well water was discontinued. Since then all water provided to the Ventura County District has been purchased from the State Water Project.

⁵⁹ A Class A utility is defined as an investor-owned water utility with over 10,000 service connections.

⁶⁰ The transaction was authorized by the Commission in D.01-09-057.