A. Location, size, water supply, last general rate case increase in 1993.

Yermo is located ten miles north of Barstow in San Bernardino County and serves approximately 350 metered customers in Tracts 6593 and 6598 which are near the Township of Yermo, and Tracts 2459 and 2195 in Yermo. Most of the connections serve single family residences. The customer base of Yermo has not significantly increased since 1993. According to Yermo's 2005 Annual Report, it had 350 connections in 2005 compared to 343 in 1993.

Yermo's only source of water are three wells located adjacent to or in close proximity to the service area. Within that area, Yermo maintains two stand-alone pressure zones: (i) the "Main Zone," where Yermo operates Marine Wells Nos. 1 and 2; and (ii) the "Hel Bro Zone," where the Hel Bro Well No. 1 is operated. The total capacity of all three wells is approximately 450 gallons per minute. Three hydro-pneumatic tanks comprise Yermo's only water system storage as follows: in the Hel Bro Zone, a 10,000 gallon tank and in the Main Zone, two tanks having a total combined capacity of 15,000 gallons. The water system has no transmission lines. Instead, two- to four-inch distribution mains and laterals serve Yermo's customers. On November 23, 1993, the Commission issued Res. W-3812, which increased Yermo's gross annual revenue requirement 137% or $76,019 for Test Year 1993, and a 13.4% rate of return was authorized. Donald Walker has been the sole owner and operator of Yermo since 1993. For the past several years, he has been residing in Florida and attempts to manage Yermo from his Florida residence. Despite a record of deferred or non-existent maintenance, unmet regulatory mandates, and continuing problems with water quality and service, Yermo has not filed another general rate case ("GRC") application since 1993.

B. Yermo fails to respond to and comply with Commission orders, rules, and regulations.

Res. W-3812 ordered Respondents to develop a plan of action for infrastructure improvement and to periodically report on its progress in implementing the plan. The pertinent ordering paragraphs of that Resolution are quoted below:

· Yermo Water Company shall maintain a customer complaint log and shall comply with the provisions of GO 103 with respect to customer complaints. [Ordering Paragraph ("OP") 6.]

· Within ninety (90) days of the effective date of this order, Yermo Water Company shall file a plan of action with the Water Utilities Branch, detailing the repair work, system upgrading, new personnel hired and/or equipment purchases to be made as a result of this rate increase. Such plan shall be made available to any customer, upon request. [OP 7.]

· Commencing July 1, 1994, and once every six months thereafter, until relieved by the Branch, Yermo Water Company shall file a report with the Water Utilities Branch showing the progress completed on the above plan of action and the remainder left to be accomplished. Such report shall also be made available to any customer, upon request. [OP 8.]

To a large extent, Yermo has failed to comply with all of the above OPs. In a letter dated January 19, 1995, the WUB Program and Project Supervisor, Robert E. Penny, wrote and asked Yermo to explain its failure to comply with OP 7 and to provide a date for compliance. Regarding OP 8 above, on January 24, 1995, Mr. Penny again wrote and asked Yermo to explain its failure to comply with that order and for a date when Yermo would comply. Yermo has never responded to WUB's inquiries and to WUB's knowledge has not substantively complied with that Order. Thus, since Res. W-3812 was issued in 1993, Yermo appears to have disregarded and has been unresponsive to Commission orders, rules, and regulations