IX. Remedies

The OII directs me to determine, if any of the allegations are sustained, what fines, penalties, or other remedies are appropriate. In the following, I discuss three main remedies: penalties, reparations, and authorization to petition for a receiver.

A. Penalties

Section 2107 authorizes the Commission to impose a penalty of not less than $500 nor more than $20,000 on any utility "which fails or neglects to comply with any part or provision of any order, decision, rule, direction, demand, or requirement of the commission, . . . ." Section 2109 also indicates that "the act, omission, or failure of any officer, agent, or employee of any public utility, acting within the scope of his official duties or employment, shall in every case be the act, omission, or failure of such public utility."

The overall guidelines for determining fines and penalties were discussed by the Commission in a 1998 decision.⁷⁰ The purpose of a fine is to deter future violations by the perpetrator or others. The severity of the offense and the perpetrator's conduct guide the Commission in setting a fine that is proportionate to the offense. Also, the Commission must consider the financial resources of the perpetrator in balancing the need for deterrence with the constitutional prohibition on excessive penalties.

Conlin-Strawberry's willful failure or neglect to comply, on a repeated and continuing basis, with previous Commission decisions, as recounted herein, provides sufficient grounds for the imposition of financial penalties. Conlin's conduct as an officer and agent of the company, violation of Section 2109, would also warrant the imposition of penalties against him individually. In this case, the authorization to seek a receiver and the reparations order (infra), without additional financial penalties, are sufficient punishment and will work as forceful deterrents of future offenses by Conlin-Strawberry, Conlin, or others. Respondents have no doubt incurred considerable legal fees in this proceeding since October 2003. The imposition of penalties will only compound the precarious financial condition of the utility. With new management, the use of penalties simply for retribution would be counter-productive to achieving operational improvements.

Respondents advance several arguments as to why they believe that various statutes of limitations bar the recovery of any money from respondents or the imposition of any fine or penalty. Since I have determined that penalties should not be imposed, respondents arguments based on Code of Civil Procedure Sections 340 (one-year period for actions for penalties) and 343 (four-year period when no other period specified) and Section 2104 (actions to recover penalties, in respondents' view, must be brought in superior court) are not applicable.

B. Reparations

Earlier, I determined that Conlin-Strawberry's practice of collecting these surcharges violates Sections 532 and 734. Under these circumstances, the Commission is empowered by Section 734 to order reparations, "with interest from the date of collection if no discrimination will result from such reparation." I can envision no reason why reparations to ratepayers, if returning amounts illegally collected, would be discriminatory.

Respondents also invoke another statute of limitation, Section 735, and argue that this provision establishes a two-year limitation on reparations claims. Respondents are wrong. Section 735 does not prevent the Commission from ordering reparations of any illegally collected amount, regardless of the period of impermissible collection. The section only requires that the Commission file its action to enforce its order, if necessary, within one year of the order.

C. Petitioning for a Receiver

As recounted earlier, Section 855 authorizes the Commission to petition superior court for the appointment of a receiver in three instances: (a) when the water utility "is unable or unwilling to adequately serve its ratepayers"; (b) "has been actually or effectively abandoned by its owners"; or (c) "is unresponsive to the rules or order of the commission." Respondents offer their version of the legislative intent behind this section and argue that the Legislature never intended it to be used in situations like that before me.

Respondents do not offer convincing reasons for probing legislative intent or for adopting the version they offer. While "the fundamental principle of statutory interpretation is to ascertain the intent of the Legislature,"⁷¹ California courts first look first to the words of the statute. I do not find phrases (a) or (c), supra, to be vague or ambiguous. Both are commonly understood concepts. The conduct I have detailed in this decision amply supports the conclusion that the respondents have been unable or unwilling to adequately serve the utility's ratepayers, and have been unresponsive to the Commission's orders (including my discovery orders in this proceeding).

The phrase "actually or effectively abandoned" may be undefined, but respondents' proffer of legislative intent is an unreliable guide. All that respondents offer is a legislator's press release and one witness's statement. California courts have held that "[m]aterial showing the motive or understanding of an individual legislator, including the bill's author, his or her staff, or other interested persons, is generally not considered."⁷² Even if respondents' version is examined, respondents' conduct falls well within the definition of "effective abandonment" offered by the witness supporting the enactment of Section 855, e.g., a failure to operate (especially the failure to provide a consistent, reliable operator), a refusal to make service-related improvements ordered by the Commission (such as engineering plan).⁷³

Respondents are more helpful in identifying the cases where the Commission has actually used Section 855 and found effective abandonment. In the two contested cases identified by respondents, Ponderosa Sky Ranch Water Co.⁷⁴ and Arrowhead Manor Water Co.,⁷⁵ the water utilities violated Commission and DHS orders and, in Ponderosa's case, failed to conduct monthly water quality testing. The conduct proven in this proceeding is well within the scope of conduct recognized in Ponderosa and Arrowhead as constituting effective abandonment. The criteria of Section 855 are satisfied, and the Commission is well within its authority to seek the necessary appointment of a receiver.

In their defense, respondents argue that the appointment of a receiver for the company would be an inappropriate remedy. Respondents maintain that the system does not face an "impending catastrophe" and questions whether anything is wrong with the quantity and quality of the water.

The DHS's January 28, 2005, letter to Conlin, "Notice of Violations for Haloacetric Acid Maximum Contaminant Level," does much to dampen respondents' argument.⁷⁶ While DHS indicates that there is no immediate health risk due to exceedances of water quality standards, I am particularly concerned because DHS reports that Conlin-Strawberry failed to take required monthly water samples during January, February, and April 2004. This period is even before Jim Pingree became employed full-time elsewhere.

DHS' letter aside, the Commission should reject the suggestion that we wait to "pick up the pieces" after a catastrophe has occurred. I share the Water Division's concern that Conlin-Strawberry's multiple demonstrations of inattention, unreliability, lack of routine, and haphazard management will result in serious consequences to the customers of the system. Neither the Commission nor the customers may or should be confident that Conlin will responsibly manage the water system.

Respondents may be correct in their arguments that finding a receiver may be difficult and expensive. I am confident that the Water Division and Superior Court will work responsibly to achieve improved management for the water system. The Commission will carefully review, based on a future application or advice letter, the necessary rate decisions to do so. Based on discontent registered in customers' postcards to the Commission, ratepayers are likely to support actions necessary to improve system management.

The Commission should aspire to utility service that remains in the background of people's lives. When a customer flips the switch, the lights should come on. When a customer turns the faucet, healthful water should flow. Utility service should not become a constant irritant in customers' lives, e.g., potholes that are never filled, tank leaks that are never sealed, telephone calls that are never answered. Customers pay reasonably for this basic service. Afforded numerous opportunities to cure these problems for over two decades, Conlin-Strawberry and Conlin have squandered these opportunities. They have proven themselves unwilling to and incapable of providing reasonable basic water service. They have forfeited any last chance to do so now.