ALJ/JET/hkr Mailed 9/23/2004

Decision 04-09-038 September 23, 2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of California Water Service Company (U 60 W) for an Order Authorizing it to Increase Rates for Water Service in its South San Francisco District.	Application 03-10-017 (Filed October 1, 2003)
Application of California Water Service Company (U 60 W) for an Order Authorizing it to Increase Rates for Water Service in its Stockton District.	Application 03-10-018 (Filed October 1, 2003)
Application of California Water Service Company (U 60 W) for an Order Authorizing it to Increase Rates for Water Service in its Mid-Peninsula District.	Application 03-10-019 (Filed October 1, 2003)
Application of California Water Service Company (U 60 W) for an Order Authorizing it to Increase Rates for Water Service in its Salinas District.	Application 03-10-020 (Filed October 1, 2003)
Application of California Water Service Company (U 60 W) for an Order Authorizing it to Increase Rates for Water Service in its Bakersfield District.	Application 03-10-021 (Filed October 1, 2003)
Application of California Water Service Company (U 60 W) for an Order Authorizing it to Increase Rates for Water Service in its Salinas District (excluding the service areas of the County Meadows Mutual Water System and the Indian Springs Mutual Water System).	Application 03-10-031 (Filed October 1, 2003)

Greg Bowling, Todd Alexander Pickles, Bingham McCutchen, LLP, Attorneys at Law, and
Thomas F. Smegal, Manager of Rates, for
California Water Service Company, applicant.

Natalie Wales, Attorney at Law, for Office of Ratepayer Advocates, protestant.

OPINION APPROVING SETTLEMENT

TABLE OF CONTENTS

Title Page

OPINION APPROVING SETTLEMENT 22

I. Summary 22

II. Background 33

III. Procedural History 33

A. Prehearing Conferences (PHCs) 33

B. Intervenors 44

C. Interim Rate Relief 55

D. Public Comment 66

E. Settlement Discussions 77

IV. Settlement Criteria 77

V. Settlement Overview 99

A. Net Operating Income 99

1. Water Sales 1010

2. Operating, Maintenance, Administrative & General Expenses 1010

3. General Office Expenses 1111

B. Rate Base 1111

1. Plant Additions (2003) 1111

2. Water Main Expenditures (2004 and 2005) 1111

3. Additional Plant Expenditures (2004 and 2005) 1212

4. Bakersfield North Garden Project 1212

C. Rate of Return 1313

D. Revenue Requirement 1313

E. Attrition 1414

VI. Comments on Proposed Decision 1515

VII. Assignment of Proceeding 1515

Findings of Fact 1515

Conclusions of Law 1616

ORDER 1717

ATTACHMENTS A, B, & C

OPINION APPROVING SETTLEMENT

I. Summary

The Commission approves a comprehensive settlement agreement entered into by California Water Service Company (CWS), the Office of Ratepayer Advocates (ORA), and all other parties covering all issues in CWS's general rate increase application for two districts: South San Francisco and Bakersfield.

Pursuant to this decision, CWS is authorized a general rate increase for test year (TY) 2004, 2005, and attrition years (AYs) 2006 and 2007 for these two districts in the amounts and percentages shown in Table 1. This table also shows the bill increases (in one instance, a decrease) based on average consumption in each district.

Table 1
Summary of Bill Increases & Revenue Requirement Increases

District/Year	Bill Increase (Average consumption)		Settlement/Adopted (Thousands of $)
	$	%	$	%
South San Francisco:
2004	-3.58	-12.01	-1,155.0	-9.98
2005	0.57	2.17	210.4	1.99
2006 AY	n/c	n/c	209.0	1.9
2007 AY	n/c	n/c	209.0	1.9
Bakersfield :
2004	1.13	2.81	1,543.4	3.61
2005	1.59	3.85	1,598.7	3.57
2006 AY	n/c	n/c	1,385.6	3.0
2007 AY	n/c	n/c	1,385.6	2.9
n/c=Not calculated

The agreed-upon rate of return is 8.6% for all years 2004 through 2007.