COM/CXW/GFB/vfw/mnt Mailed 9/19/03

Decision 03-09-072 September 18, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Investigation on the Commission's own motion into the operations, practices, rates and charges of the Hillview Water Company, Inc., a corporation, and Roger L. Forrester, the principal shareholder and president, Respondents.

Investigation 97-07-018 (Filed July 16, 1997)

Carol A. Dumond, Attorney at Law, and
Mohsen Kazamzadeh, for the Commission's
Water Division.

Douglas W. Stern and Leslie Ravestein,
Attorneys at Law, and Roger L. Forrester,
for Hillview Water Company, Inc., and
Roger L. Forrester, respondents.

FINAL OPINION

TABLE OF CONTENTS

TITLE PAGE

FINAL OPINION 2

Summary 2

Introduction and Procedural History 3

Background 7

1. Hillview's Borrowing and Lending History 7

2. Fees for Facility Additions 14

Discussion 17

1. Did the Respondents Violate Commission Orders on the Extension of Service to New Customers? 18

2. Did the Respondents Submit Falsified Contracts or Information to the Commission? 28

3. Did the Respondents Charge Customers Unauthorized Fees for the Connection of Service and in Turn Rebate Amounts in Contravention of Tariff and Service Extension Requirements to Shopping Center Developers? 29

4. Did the Respondents Divert Revenue Collected Expressly to Repay a SDWBA Loan from a Special Account and Apply the Funds to Other Purposes, Including Personal Business Use by Forrester? 31

5. Did Hillview's AL 53 Misstate the Level of the Special Fund Account Due to Unlawful Diversions? 32

6. Did the Respondents Overstate Long-Term Debt and Hillview's Plant Account by Misrepresenting Loans Obtained by Forrester for Personal Business? 33

7. Did the Respondents Obtain a Personal Loan of $350,000 from a Developer, Then Ask the Commission for Authority to Repay it Without Acknowledging that the Loan Was Used, or Intended to be Used, for a Personal or Non-Utility Purpose? 38

FINES/PENALTIES: 40

Conclusion 44

Comments on the Proposed Decision 46

Assignment of Proceeding 48

FINDINGS OF FACT 48

CONCLUSIONS OF LAW 51

FINAL ORDER 53

FINAL OPINION

Summary

This decision resolves all of the outstanding issues, except for the reconciliation of accounts that relate to the above-captioned Order Instituting Investigation (OII). The issues in this OII relate to the respondents' alleged violation of statutes, rules and tariffs administered by the Commission.¹ We determine that the respondents, Hillview Water Company, Inc. (Hillview or the company) and Roger L. Forrester (Forrester) violated Sections 491 and 825 of the California Public Utilities Code,² and Tariff Rule 15. We order the respondents to reconcile all of their accounts for the period from January 1, 1991 to and including June 30, 2003 and to submit an account reconciliation report to the Commission in a general rate case application, which shall be filed within nine months from the effective date of this decision. We also order the respondents to issue refunds of the supply and storage fees they unlawfully collected to Hillview customers upon receipt of written refund claims from those customers in accordance with the terms of Tariff Rule 15. We order the respondents to prepare and include a comprehensive report on the refunds in the general rate case application. We also order the respondents to notify the customers regarding the refunds in a local newspaper within 30 days from the effective date of this decision and again after three months from the publication of the first notice. Lastly, we impose a fine of $1000 on the respondents for violating various statutes and Commission tariffs. The $1000 fine shall be remitted to the Commission within 60 days from the effective date of the decision. Investigation (I.) 97-07-018 will be closed upon the respondents' filing of a general rate case application. All compliance issues, including the reconciliation of accounts, the refund report, and the past due payments of supply and storage fees, shall be matters to be addressed in the general rate case.