III. Procedural History

By Resolution ALJ 176-3107 (February 17, 2003), the Commission preliminarily determined the four applications to be ratesetting proceedings. The Commission expected the proceedings to go to hearing. Only ORA protested the applications during the protest period.

A. Prehearing Conferences

The initial prehearing conference (PHC) concerning the four applications was held by Administrative Law Judge (ALJ) John E. Thorson on April 4, 2003, with CWS and ORA counsel and representatives in attendance. With no objection, the ALJ consolidated the four separate applications into one proceeding. During the PHC, the issues raised in the applications and protests were identified, a schedule was discussed, and other issues relating to the proceeding were addressed. Assigned Commissioner Geoffrey Brown's April 23, 2003 Scoping Ruling confirmed the categorization and need for hearing, defined the issues, established a schedule, and designated ALJ Thorson as the principal hearing officer and thus the presiding officer.

On August 4, 2003, the ALJ issued a ruling requiring the parties to meet in an effort to settle some or all of the issue. The ALJ also required the parties to submit a joint PHC statement by October 9, 2003, with a final PHC scheduled for October 20, 2003. The evidentiary hearings were scheduled for October 27-31, 2003.

B. Intervenors

On May 9, 2003, the Leona Valley Cherry Growers Association (Cherry Growers) moved to intervene in the proceeding. The ALJ granted the motion on June 2, 2003, subject to the condition that the Cherry Growers would only participate in those issues relevant to undetermined issues in a separate proceeding in which they were involved, A.02-11-021 (CWS/Antelope Valley District). On June 2, 2003, Jeffrey Young (Young) also petitioned to intervene in the proceeding. The ALJ granted Young's request on the condition that he could only participate in those issues relevant to undetermined matters in a separate proceeding in which he was involved, A.02-11-020 (CWS/Redwood Valley District). The Cherry Growers and Young were added as parties to the service list.

On November 20, 2003, the ALJ granted the motion of Michele Waterbury, representing the City of Oroville Parks Commission, to intervene as an interested party, but only as to issues pertaining to Oroville.

C. Interim Rate Increase

On April 25, 2003, CWS filed its motion to set the effective date of interim rates pursuant to Section 455.2 of the Public Utilities Code. A hearing on the motion was held before the ALJ on May 9, 2003. On September 30, 2003, the ALJ's proposed decision was mailed by the Commission. In the proposed decision, the ALJ recommended that CWS be authorized an interim rate increase for all districts based on the rate of inflation as compared to existing rates for each of the districts (the rate of inflation to be calculated using the most recent Consumer Price Index maintained by the U.S. Department of Labor). The Commission adopted the ALJ's proposed decision with the interim rate increase effective as of October 30, 2003. See Decision (D.) 03-10-072.

D. Public Comment

Public participation hearings (PPHs) were held in all four districts between August 5 and 12, 2003. Attendance was light at all venues. Selma was the most heavily attended with eight speakers including Mayor Dennis Lujan. Four persons spoke at the Palos Verdes PPH, one at the Torrance (Dominguez) PPH, and one at the afternoon PPH in Oroville. No one appeared for the evening PPH in Oroville. All the speakers opposed rate increases, at least in the amount proposed by CWS. Many speakers indicated they and other customers were on fixed incomes and would be detrimentally affected by the proposed increases.

Following the Palos Verdes PPH, the ALJ issued a ruling requiring CWS to file a report concerning a service-related complaint by certain customers and to provide additional history concerning rate increases to other customers. CWS complied with this ruling.

Additionally, a total of 21 letters or e-mails were sent to the Commission's Public Advisor about these applications (18 concerning Palos Verdes, one each concerning Dominguez and Oroville, and one unidentified). All of these communications opposed the applications.

E. Settlement Discussions

On September 19, 2003, ORA served its reports relating to the four districts and notified all parties, including the intervenors, that a settlement conference would be held on October 2, 2003. CWS served its rebuttal testimony on September 30, 2003.

CWS and ORA held settlement conferences between October 2 and 8, 2003. Pursant to the Rules of Procedure and Practice 51.1(b), all parties, including all intervenors at that time, were provided written notice of the conference. They were later notified that they could also participate by telephone. The Cherry Growers participated by phone in some of the settlement discussions, and Young was orally informed about the status of the discussions.

As a result of the extensive negotiations between the parties during four days of discussions, CWS and ORA reached a settlement as to all of the issues in this proceeding. See Settlement (Oct. 23, 2003), Attachment A (also Hearing Exhibit No. 23, and Addendum to Settlement (Oct. 27, 2003), Attachment B (also Hearing Exhibit No. 25). Also, the intervenors (except for Waterbury who had not yet sought to intervene) agreed to the settlement with respect to the issues on which they were authorized to participate. CWS and ORA filed a joint motion on October 23, 2003, to approve the settlement.

On November 24, 2003, a hearing was held to present the settlement to the ALJ. Because of some uncertainty about the intervenors' position on the proposed settlement, an evidentiary hearing, pursuant to Rule 51.6, was held on November 24, 2003, to allow the settling parties to present evidence (including a Joint Comparison Exhibit, Hearing Exhibit No. 25) on the proposed settlement and to allow cross-examination. Intervenor Waterbury participated in the hearing and offered evidence concerning Oroville's rates as compared to surrounding communities, the history of rate increases in Oroville, the city's declining economic condition, and related matters. Upon questioning by the ALJ, Waterbury indicated that she agreed with the proposed settlement since it results in a rate reduction for Oroville, although she also supported a greater reduction if the evidence justified it. Waterbury did not oppose the settlement. Transcript at 280:12 to 281:9 (Nov. 21, 2003).

The record was left open for the submission, by stipulation, of other exhibits. The record was closed and the matter was submitted on December 12, 2003.