7. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure.

DRA, Cal Water and Young filed comments. DRA suggested ministerial changes, which we have made. Cal Water made more substantive recommendations, some of which we allow and some of which we deny, as set forth below. We also adopt most of Cal Water's suggested ministerial changes. Young opposed anything but Tier 3 advice letter treatment under GO 96-B for General Office rate increases; we deny this request.

First, Cal Water asks us to make a finding that PayGo treatment is the best outcome for ratepayers. We are not prepared to make this finding, as there is insufficient information in the record on the point. We are comfortable with a settlement on this issue using PayGo treatment, but because the parties did not litigate the issue of which treatment was optimal for ratepayers, we cannot make the finding Cal Water requests. We do make some minor wording changes, however.

Second, Cal Water also asks us to make an affirmative finding that the water quality in the Eight Districts shows no material problems. As we explain in the decision, this is the first decision after the latest rate case plan, and the Division of Water and Audits was unable to make a water quality assessment. Cal Water agrees that "DRA's role does not extend to rendering an opinion on whether or not a utility complies with all water quality regulations."⁷⁰ Thus, we are not prepared to make such a finding at this time; there simply is not adequate information in the record to opine either way.

Third, Cal Water asks us to extend the deadline for its rate base offset pilot program from June 30, 2009 to the end of the rate case cycle for the Eight Districts. It notes that several of the projects in the pilot will not be constructed until as late as 2011. We agree with Cal Water that we should extend the pilot to the end of the rate case cycle for the Eight Districts. We will review the pilot's results in the next GRC on the Eight Districts.

Fourth, Cal Water asks that the General Office offset filings be Tier 1 (ministerial) advice letters rather than Tier 3 letters requiring Commission approval. We do not specify the Tier Cal Water muse use, but give Cal Water flexibility for purposes of this decision only.

Fifth, Cal Water reiterates its request that we adopt its own health care escalation formula. As we say in the decision, this issue was just decided and we are not prepared to change our determination.

⁷⁰ Comments of California Water Service Company on Proposed Decision of ALJ Thomas (Cal Water Comments), p. 6.