Findings of Fact

1. All parties have agreed to settle this case.

2. The Settlement Agreement is the product of extensive discussions between the settling parties. SCWC, ORA, and Bear Mountain entered into these discussions after a complete review of the filed testimony and after review of SCWC's filed rebuttal testimony.

3. SCWC, ORA, and Bear Mountain fairly reflect all affected interests in this proceeding. SCWC represents the interests of its shareholders. ORA represents the interests of all SCWC customers. Bear Mountain represents itself as a large energy user.

4. As demonstrated by the testimony and rebuttal testimony of SCWC, there is significant contestable discrepancy between SCWC, ORA and Bear Mountain as to the degree and extent of the reasonableness of SCWC's contracts for purchased energy under the Mirant and Pinnacle contracts.

5. The Settlement Agreement sets a cap of $77.00 per MWh for the weighted average annual cost in calculating the Energy Charge component of the PPAC rate.

6. The Settlement Agreement provides that the cost differential between the cap cost of $77.00 per WMh and $87.41 per MWh will be applied to the average of actual purchases and prorated adopted purchases for the period April 1, 2001 forward to the end of the calendar month of the date of the Commission decision approving the Settlement Agreement. This amount will reduce the undercollection in the PPAC balancing account to the benefit of all customers.

7. The Settlement Agreement provides that the Power System Delivery Charge costs, for rate design purposes will be reduced from $2,749,780 per year requested in SCWC's application to $2,120,024 per year thus reducing energy costs by $ 629,756 per year and reducing annual energy costs for SCWC electric customers.

8. The Settlement Agreement results in a fixed rate for the PPAC Balancing Account surcharge of $0.02246 per kWh until August 31, 2011 or when the remaining balance in the PPAC is equal to or less than $100,000.

9. The Settlement Agreement provides that a $600,000 step and attrition allowance for SCWC previously approved for SCWC's water utility customers will not be included in water rates for 2002 to the benefit of SCWC water utility customers.

10. The Settlement Agreement provides that SCWC will act in good faith to pursue its action against Mirant. If the action results in power costs lower than $77.00 per MWh then power costs will be reduced accordingly to the benefit of SCWC customers.

11. The Settlement Agreement provides a rate design that does not increase rates for those permanent residential customers using 130% or less of baseline allowance consistent with the mandates of AB 1X.

12. Conducting a further proceeding would unnecessarily consume valuable resources of the Commission, SCWC and other parties and would delay, and possibly prevent, the realization of the benefits identified above pertaining to reductions in PPAC energy rates and the PPAC Balancing Account.