Proposed Conditions of Approval

The applicants have repeatedly stated that they are in full compliance with the conditions adopted by the Commission in D.04-01-051, and that the new owners of LNR intend to continue such compliance.

The conditions require, among other things, that the transaction will have no effect on the Commission's authority over Valencia. Valencia is required to continue to offer its customers high quality public utility water service, and to maintain its high level of community involvement.

Significant restrictions are imposed on all transactions between Valencia and the corporate affiliates. Financial transactions are particularly limited, and annual reports are required. Ratemaking requirements are also imposed, with all costs of the acquisition excluded from Valencia's rate base. The conditions are in Attachment C to today's decision.