X. Water Division Conduct
One of the issues set forth in the scoping memo is, "What extent is the financial condition of the Conlin-Strawberry Company due to the failure to receive timely rate relief from the Commission?" This issue refers to an incident in 2000 when the Water Division and Conlin-Strawberry reached impasse on the company's advice letter request for a rate increase; and an informal hearing was held before an ALJ, pursuant to an informal dispute resolution process adopted in D.92-03-092. The procedures set forth in D.92-03-092 had been incorporated in the Water Division's Standard Practice U-9-SM.77 In August 2000, the ALJ generally ruled in favor of the company on the disputed expenses. The Water Division, however, failed to approve the advice letter or incorporate the ALJ's recommended decision in the Water Division's resolution dealing with the utility's advice letter request, as required by D.92-03-092.
Shortly after the ALJ's ruling, the Water Advisory Branch of the Water Division prepared what appears to be an internal document setting forth extensive criticism of both the merits of the ALJ's determinations and the informal dispute resolution process itself.78 Despite these criticisms, staff still recommended in its report that a resolution be prepared for the Commission and that the resolution "should contain the final observations of the Water Division Staff; and included within the resolution, the ALJ's recommended decision as an alternative, if indeed, it is different from the Staff's recommendations."79 Even after the Director of the Water Division promised in December 2000 that a resolution was still being prepared for the Commission's consideration,80 no resolution was ever submitted to the Commission.
The Water Division staff failed to comply with the informal dispute resolution process set forth by the Commission in D.92-03-092-procedures the Water Division incorporated in its own Standard Practice. The process was properly invoked by Conlin-Strawberry, and the utility was entitled to have the process run its course. The Water Division has failed to provide a convincing explanation why the specified procedure was not followed. By short-circuiting the prescribed process, the Water Division effectively made a decision that was entrusted by law to the Commission and, in the process, deprived the Commission of the ALJ's proposed disposition. Despite its policy objections, the Water Division had a ministerial obligation to present the ALJ's determinations to the Commission. Inaction was inappropriate.
Because the ALJ's determinations were part of an informal dispute resolution process, they did not result in an adjudication of any of the facts or issues raised before him-especially since the Commission was never afforded an opportunity to act decisively upon a resolution transmitting his determinations. However, I find that the Water Division's conduct is not the proximate cause of the financial and management difficulties that have resulted in the numerous deficiencies and violations of orders as recounted herein. The major problems that are central to my determinations today preceded the informal process conducted in 2000.
Respondents also allege they have been injured in that the quality of the record in the present proceeding is inferior to the evidence before the ALJ in the 2000 hearing. Except for documents that respondents themselves may have lost, the record in the present proceeding is far more extensive than the earlier one before the ALJ. Compared to the one-day informal hearing, the evidentiary hearing in this OII extended ten days. I find no specific indication of evidentiary detriment to respondents. The Water Division's conduct does not afford a defense, estoppel, or mitigation to the charges brought by the OII.81
77 Ex. No. 107: Standard Practice for Processing Informal General Rate Cases of Class B, C and D Water Utilities and the Service Guarantee Plan, Standard Practice U-9-SM (Jan. 2002). 78 Ex. No. 86: Kerrie Evans, Staff Report on the ALJ's Ruling Dealing with Informal General Rate Case Issues of the Conlin-Strawberry Water Company (Aug. 2001). 79 Id. at 6 (emphasis in original). 80 Ex. 504, Water Division Director's letter (Dec. 4, 2000). 81 Respondents' Opening Brief, at 30-38, provides additional information on this incident, as does Ex. No. 86, supra note 78, and the testimony in this proceeding.
