3.00 District Expenses

3.01 Cal Water and ORA agree to use the depreciation rates previously adopted by the Commission and currently in effect for each district rather than the proposed rates of either party.

3.02 ORA agrees that its estimate of franchise fees for Test Year 2002 in the Westlake district should be corrected to include local franchise fees based on test year revenues.

3.03 ORA agrees that Cal Water's deferred income taxes and depreciation expenses based on the adopted depreciation rates and rate base should be used to calculate income taxes in accordance with the Commission's rate setting policy.

3.04 ORA and Cal Water agree that the Department of Health Services (DHS) fees should be added to ORA expense estimates. The five-year average (1996-2000) of the DHS fees contained in Cal Water's workpapers should be used to estimate the appropriate level of these fees in each district. Attached as Appendix A is a list of fees by district.

3.05 ORA and Cal Water agree that ORA's estimates for postage should be increased to reflect the postal rate increase, effective July 1, 2002, of 2.3 cents per bill or 9.02%.