V. Proponents' Explanation of Why the Stipulation is in the Public Interest

Applicant and ORA represent that they, as proponents of the stipulation, fairly represent all of the affected interests. They say the stipulation fairly balances Applicant's ability to earn a fair return with the ratepayers' need for reasonable rates. For example, the stipulation allows Applicant to construct a water treatment plant in Bakersfield to improve water quality and meet future needs while limiting the costs of the plant that Applicant can recover in rates. In addition, the stipulation provides for a cost of capital based on returns authorized for comparable water companies.