I. SUMMARY

On June 19, 2003, we issued D.03-06-072, our original decision in this case, revising the procedures that Class A water utilities must follow in order to recover offset expenses from balancing accounts existing on or after November 29, 2001. On July 23, 2003, both California Water Association and its Class A Water Utility Members (CWA) and Southern California Water Company (SCWC) filed applications for rehearing. We have carefully reviewed rehearing applicants' contentions and, as discussed below, have concluded that D.03-06-072 should be modified in certain respects and rehearing of the modified decision should be denied.