4. Removal of Salinas District from Consolidated Proceedings

In D.03-01-081, the Commission found that Cal Water was providing public utility water service in two areas formerly served by mutual water companies but now included as unapproved portions of Cal Water's Salinas district. Cal Water acquired Indian Springs Mutual Water Company on March 12, 1997; it is not hydraulically connected with but is adjacent to Cal Water's Salinas district system and has 175 customers. Cal Water acquired Country Meadows Mutual Water Company on March 9, 2000, and it has 108 customers in Monterey County. It is neither hydraulically connected with nor adjacent to Cal Water's Salinas district system.

Cal Water has not complied with the Commission's requirements for obtaining approval of either acquisition or rates being charged these new customers. In D.03-02-081, the Commission set a briefing schedule to resolve the issues of refunds and penalties arising from Cal Water's actions.

These unapproved acquisitions also implicate Cal Water's revenue requirement for the Salinas District. The Water Division is reviewing Cal Water's late-filed advice letters (Cal Water 1514 and 1515) for these acquisitions and is carefully scrutinizing any effects on the Salinas district's revenue requirement.

Finally, we note that pending approval of the acquisitions, Cal Water does not have authority to serve these customers, all of which have been included in its revenue requirement calculations for this rate case.

Issues regarding unauthorized acquisition of systems are not present in other districts in this consolidated proceeding. We, therefore, determine that the Salinas district general rate case application (A.01-09-071) should be removed from this consolidated proceeding and processed separately. All issues relating to the Salinas district will be resolved in the separate docket.