4. Procedural History

By Resolution ALJ 176-3131 dated April 1, 2004, the Commission preliminarily determined the captioned applications to be "ratesetting," with hearings indicated. On April 21, 2004, ORA filed protests to both applications, and on April 22, 2004, City filed a limited protest to A.04-03-024.

A prehearing conference (PHC) was held on May 19, 2004 to establish the issues and a hearing schedule. Upon the joint motion of applicant and ORA, the two applications were consolidated. On June 4, 2004, Assigned Commissioner Michael R. Peevey issued a scoping memo and ruling that set a hearing schedule which called for one public participation hearing (PPH) in Thousand Oaks and an evidentiary hearing. The scoping memo designated Administrative Law Judge (ALJ) A. Kirk McKenzie as the principal hearing officer.

The PPH was held in Thousand Oaks on June 29, 2004. About 40 ratepayers from the Village District attended the PPH, and about half of them spoke.⁶ Many of these customers noted that Cal-Am's rates were significantly higher than those charged by City or Cal-Water, and almost all of the speakers were critical of Cal-Am's response to two emergencies that had occurred in the Spring of 2004, one involving an "algae bloom," and the other a water main break that took place the night before the PPH. Several speakers complained that when they telephoned Cal-Am's national call center (which is located in Alton, Illinois) on June 28, they were either put on hold for long periods, treated rudely by service personnel while trying to describe the problems in their areas, or had their phone calls cut off.

On July 6, 2004, ORA distributed two reports concerning the applications. ORA's report on the Coronado District is Exhibit 12 in this proceeding, and its report on the Village District is Exhibit 13. For both districts, ORA recommended substantially lower revenues than those proposed by Cal-Am. For the Coronado District, ORA recommended a revenue decrease of $80,400 (or 0.65%) in 2005, with smaller decreases in 2006 and 2007. ORA stated that its recommendations for the Coronado District amounted to an overall rate decrease of 0.78%. For the Village District, ORA recommended a revenue decrease of about $2.025 million in 2005, a small increase of $17,000 in 2006, and a decrease of $171,500 (or 0.96%) in 2007. ORA stated that overall, its recommendations for the Village District translated into a net revenue decrease of 10.5%.

On July 6, 2004, two witnesses served testimony on behalf of Thousand Oaks. The testimony of Donald Nelson, the Public Works Director of Thousand Oaks, asserted that the application failed to present adequate data about the capital improvements Cal-Am was proposing to make between 2005 and 2007. Nelson also contended that Cal-Am had failed to meet City's standards with respect to fire flow and/or water pressure in a number of geographic areas and commercial locations, including Conejo Oaks, Warwick Avenue, the Los Robles Regional Medical Center and the Oaks Mall (the last of which is the major shopping center in Thousand Oaks). The testimony of Scott Mitnick, the Assistant City Manager of Thousand Oaks, also noted that significant amounts of data were missing from the application, and Mitnick suggested that it was likely a much larger rate decrease was justified than the one proposed by Cal-Am. He also elaborated upon the problems with the national call center that had been described at the June 29 PPH.

On July 21, 2004, Cal-Am served rebuttal testimony addressing all of the points covered in the testimony of ORA and Thousand Oaks.

Under the procedural schedule set forth in the scoping memo, the parties had set aside the last week of July to conduct settlement discussions. On July 29, they sent e-mail messages to ALJ McKenzie informing him that while no agreements had yet been reached, their discussions had made significant progress and would continue. On August 6, 2004, Cal-Am informed the ALJ that it had reached settlements with ORA concerning a significant number of issues for both the Coronado and Village Districts, and that settlement discussions would continue. Cal-Am also noted that while it had not yet settled any of the issues raised by Thousand Oaks, discussions with City would also continue.

On August 13, 2004, Cal-Am electronically distributed two agreements providing for the settlement of all issues that had been raised in the case. On August 16, a brief evidentiary hearing was held, during which the ALJ questioned the witnesses for Cal-Am, ORA and Thousand Oaks about various provisions in the settlement agreements. On August 19, 2004, Cal-Am filed the final versions of the agreements along with corrected tables, as well as a motion for their adoption.

After the hearing, the only issue remaining was whether a separate application would be necessary under Pub. Util. Code § 854 to obtain Commission approval of a proposed exchange of service territories between Cal-Am and Thousand Oaks. Under the exchange proposal (which is discussed in more detail below), Cal-Am would take over from City the responsibility for serving the Academy area in the northwestern part of Thousand Oaks, and City's water system would take over from Cal-Am the responsibility for serving the Conejo Oaks area. At the August 16 hearing, Cal-Am's counsel argued that no application was necessary under the language of § 854, because under the proposed exchange arrangement, Thousand Oaks and Cal-Am would each be assuming responsibility for areas contiguous to their existing service territories. On August 27, 2004, counsel for Cal-Am informed the ALJ that the company had agreed with ORA that a separate application would be filed regarding the proposed exchange, so that briefing on the statutory issue would not be necessary. In light of that agreement, the proceedings were deemed submitted on August 31, 2004.