5. Assignment of Proceeding

Geoffrey F. Brown is the Assigned Commissioner and Janice L. Grau is the assigned ALJ in this proceeding.

Findings of Fact

1. Great Oaks and ORA agree on many results of operations figures.

2. Great Oaks has experienced turnover in management and field personnel.

3. Great Oaks updated its groundwater charge estimate during the hearings due to Santa Clara Valley Water District increases for 2003. Resolution W-4423 authorizes a 13.72% revenue increase to offset a July 1, 2003 pump tax increase.

4. Great Oaks and ORA agreed to use forecasted costs of purchased power for TY 2003 and TY 2004.

5. General Order 103 requires water companies to prepare and keep system maps current.

6. The Commission approved $49.31 per hydrant in maintenance costs for San Jose Water Company.

7. Great Oaks currently maintains a fully funded pension plan and is not required to make contributions to it.

8. During hearings Great Oaks increased its request for regulatory expense from $25,000 to $50,000.

9. Great Oaks corrected data transfer errors contained in its annual reports in this proceeding.

10. Great Oaks has requested future legal expenses related to litigation with the City of San Jose over water contamination issues.

11. Great Oaks requests public relations expense for a consultant's fees. Great Oaks' Chief Operating Officer has special qualifications in public relations.

12. Employee directors receive compensation from Great Oaks and owner directors have the opportunity to earn on their investment.

13. Great Oaks provided insufficient information to approve its request for hydrant replacement at this time.

14. Great Oaks requests upgrading its SCADA system and replacing obsolete equipment.

15. Great Oaks requests replacing computers over their useful life of five years.

16. Great Oaks requests replacement of vehicles that need frequent maintenance.

17. Great Oaks requests splitting the net proceeds from water contamination litigation, a total to date of $451,016, excluding interest, booked in deferred accounts, as one half to Contributions in Aid of Construction and one half into rate base.

18. Resolution W-4094 authorizes all water utilities to establish a memorandum account for water contamination litigation expenses.

19. The Commission has used the advice letter process to add plant to rates.

20. ORA had little time to analyze data request responses furnished by Great Oaks and found additional information furnished by Great Oaks insufficient to permit ORA to make a recommendation other than disallowance for several plant additions.

21. General Order 103 requires a water company to supply water from a source reasonably adequate to provide a continuous supply of water.

22. ORA's recommended return on equity is derived from averaging 10.56% based on the RP model and 8.00% based on the DCF model.

23. Great Oaks adopted ORA's RP figure of 10.56%.

Conclusions of Law

1. It is reasonable to authorize Great Oaks to implement the rate changes Great Oaks has justified.

2. It is reasonable to decline to authorize rate increases at this time where Great Oaks has provided insufficient information to justify the increase.

3. It is reasonable and consistent with D.03-06-072 to decline to approve forecasted rates for groundwater charges and purchased power.

4. Great Oaks need not file revised annual reports to correct data transfer errors.

5. It is reasonable to limit annual director fees to outside directors.

6. It is reasonable to permit Great Oaks to divide equally the net proceeds from water contamination litigation between Contributions in Aid of Construction and shareholders.

7. It is reasonable to require Great Oaks to file an advice letter to add plant to rates when proposed projects are placed in service.

8. It is reasonable to adopt a Return on Equity of 9.78%.

9. This decision should be made effective immediately to allow Great Oaks an opportunity to earn the return found reasonable for it in TY 2003.

ORDER

IT IS ORDERED that:

1. Great Oaks Water Company (Great Oaks) is authorized to file in accordance with General Order 96A, and make effective on not less than five days' notice the revised tariff schedules for 2003 shown in Appendix B to this order and to concurrently cancel its present schedules for such service. The revised tariff schedules shall apply to service rendered on and after their effective date.

2. Great Oaks is authorized to file advice letters seeking Commission authorization for rate offsets for the following capital projects as set forth in this decision when each has

been completed and placed in service, no earlier than the year indicated and at costs not to exceed those indicated:




a. Santa Teresa Project. Test Year (TY) 2003, maximum cost of $1,838,000, and TY year 2004, maximum cost of $232,000.




a. New well and pumping equipment. TY 2004, maximum cost of $400,000.




b. Additional 4,290 feet of pipeline. TY 2004, maximum cost of $429,000.

d. Coyote Creek Pump Station Project. TY 2003, maximum cost of $120,000.

e. Two new SCADA sites. TY 2003, maximum cost of $22,000.

3. The summaries of earnings presented in Appendix A to this order and the underlying quantities and calculations included in Appendix D are adopted.

4. Great Oaks' requests in Application 02-11-048 are granted as set forth above, and in all other respects are denied.

5. Application 02-11-048 is closed.

This order is effective today.

Dated December 18, 2003, at San Francisco, California.

MICHAEL R. PEEVEY

President

CARL W. WOOD

LORETTA M. LYNCH

GEOFFREY F. BROWN
SUSAN P. KENNEDY

Commissioners

APPENDIX A

(Page 1 of 3)

Table 1

Revenue Requirement Increases

______________________

* In its April 10, 2003 Comments on Joint Comparison Exhibit, Great Oaks stated that ORA's calculations contained simple errors that ORA did not correct in the comparison exhibit

** This revenue-requirement increase has no impact on rates.