6. 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. Timely comments were filed by TCPUD and PWA, and timely reply comments were filed in response to each of these by Buyer.

Legal Error

TCPUD cites as legal error the fact that no evidentiary hearing was held in this matter. We disagree. The decision whether or not to hold a hearing is committed to the discretion of the presiding officer, in this instance the ALJ. His decision not to hold a hearing to receive evidence on the competing water system plans to "[determine] which of the competing water system plans for upgrade would actually achieve a water system that meets federal and state [compliance] requirements and . . . mandated fire flow requirements" was proper, because that is not the issue before us. As explained below, under the law, this proceeding does not require, or even permit, the Commission to elect between the two competing proposals. That choice will require completely different public processes in the future. We cannot provide a shortcut to new ownership in this proceeding, which presents only the very narrow question of whether to ratify the status quo and enable those future processes to move forward.

Although he was reluctant to do so, the ALJ announced at the PHC that he would adopt a comparatively leisurely schedule in this matter to accommodate TCPUD's request for time to develop and present its acquisition and improvement plans. As discussed below, we have now reviewed and considered those plans in detail, and we recognize that they are thorough and sound. But in the context of this proceeding, those plans can do no more than assist us in evaluating whether, on the basis of Buyer's own plans for the system, Buyer is fit to retain ownership. If the application were rejected because we determined Buyer to be unfit, the transfer would be void, and the system would revert to Seller's ownership. We have determined that such a result would at best be improvident, and at worst result in a catastrophic return to Seller's neglectful operation of the system.

We have been able to make all of these determinations without having to resort to the detailed and voluminous evidence that the parties sought to present at a formal evidentiary hearing. Holding a hearing would have needlessly delayed and complicated the process of establishing a baseline from which to move forward, with no advantage to be gained. It was not legal error for the ALJ to determine, after due consideration of the issues, that a hearing was unnecessary.

Factual Errors

The most significant factual error noted in the comments is that, contrary to a statement made in the proposed decision, TCPUD filed comments in response to the August 14, 2008 joint ruling that included a plan for acquisition and improvement of the system by TCPUD. A review of the docket card confirms that such a document was filed, but it did not come to the attention of the ALJ, either because of some deficiency in the e-filing procedure, or because a hard copy was not provided to the ALJ as required by Rule 1.1(d). Nevertheless, the Commission has reviewed and considered the entire document, including TCPUD's attached detailed plans, so this omission has been cured.

TCPUD's detailed plans lay out a credible procedure for acquiring and improving the Lake Forest Water Company system. However, this does not, as a matter of law, constitute an alternative that we can act upon in this proceeding, because that is not the issue before us. The issue is not which of two competing plans to adopt. The only issue is whether to ratify the long-ago completed transfer of the facilities to Buyer, so that Buyer's title to the system is clear. For purely practical reasons, this is what we have decided to do in the best interest of the public. Whether Buyer now retains and improves the system under the Commission's heightened oversight efforts, or divests the system (voluntarily or otherwise), must be left to subsequent developments. In any event, those developments will be recorded on a clean slate.

We have concluded that granting the application will have no possible adverse consequences within the meaning of section 854, subdivision (a), because ratification will not disturb the status quo with respect to Lake Forest Water Company's existing rates and service; the belated completion of the transfer at this point is a formality. We characterize the absence of any net consequences in the form of increased rates or reduced service as "ratepayer indifference," and we have found that this decision satisfies that test. PWA vehemently objects to the suggestion that ratepayers are indifferent to confirmation of Buyer's ownership of the system. PWA's comments misconstrue our finding, as PWA appears to regard the matter as a comparison of Buyer's improvement plan to that proposed by TCPUD. As we have already explained, that is not the question before us in this proceeding, and we do not give the term "indifference" its common meaning. It is a term of art.

Other comments are directed at the veracity of Buyer's chronology of events regarding the operation and improvement of the system to date. In particular, TCPUD objects to Buyer's characterization that TCPUD "refused" to provide a permanent connection. Again, the precision of characterizing the system's history is not a material issue in deciding whether or not to approve Seller's transfer of the system to Buyer. No matter what implication it may have for the future relationship between Buyer and TCPUD, the phrasing of chronology has no bearing upon the question of ownership that is before us.

We conclude that the comments do not compel us to change the outcome of the proposed decision in any way. No party has demonstrated that we have the power to order conveyance of the system to TCPUD instead of Buyer in this proceeding, and we are convinced that we have none. We have corrected factual inaccuracies about the state of the record, but we have not altered our order in response to the comments.