Past Operations

12. Historically, each of Casmite's customers has been required to sign a revocable license agreement with Casmite indicating that they are receiving surplus water and the water is not dedicated to public use. Since prior to 1986, Casmite has charged most of its customers for the water.

13. In 1953, after it purchased all of Casmite's stock, Unocal continued to operate the system to supply water for both its oil field operations and its Casmalia neighbors. In 1994, Unocal sold the oil field to Capco Resources, Inc., and through its Casmite subsidiary, has continued to provide water to its customers including Casmalia.

14. Since its purchase of Casmite stock (and including the period of 1994 to the present), Unocal has been deeply intertwined in the operation of the Casmite water system. Unocal has provided labor and equipment, advanced money, provided management, and allocated costs to Casmite.

15. While Casmite has operated without a CPCN (with the active involvement of Unocal), there is no evidence that Casmite abused its position as the sole provider of water to the Casmalia area. Casmite's existing rates are not based on "cost-of-service" ratesetting and, as a result, Casmite has provided water service at a loss.

16. Casmite's failure to obtain a CPCN has deprived its customers of ongoing Commission regulatory review and ratesetting. Periodic rate adjustments since 1994 would have cushioned the rate shock customers are likely to experience as rates as now set based on the cost of service. This rate shock will also be detrimental to the Casmalia community.

17. As of December 31, 2002 (the most recent financial statement in evidence), Casmite had plant and equipment of only $106,543 and accounts payable to Unocal of $520,460.

18. During the first nine months of 2004, Unocal had gross revenues of more than $5.8 billion and net earnings of $940 million. As of September 30, 2004, Unocal had assets of $12.5 billion and stockholders' equity of $4.8 billion.

19. While impermissibly operating without a CPCN, Casmite and Unocal did not abuse their monopoly position by charging excessive rates or delivering inadequate service.