3. Investigation
This investigation into the operations and practices of Yermo and its owner Walker (Respondents) was opened on April 24, 2008 because of Commission concerns that Respondents (1) have actually or effectively abandoned the Yermo water system, (2) have been and/or are unresponsive to the rules and orders of the Commission and California Department of Public Health (CDPH)4 requirements, and (3) have been unable or unwilling to adequately serve customers. Further, Division of Water and Audits5 records show that unresolved customer complaints have included inadequate water pressure, malodorous and potentially unsafe water supplies, service interruptions, contamination, inadequate fire protection equipment, and other operational problems which imperil the health and safety of Yermo's customers.6
This investigation was issued with an order for Respondents (Yermo and Walker) to show why the Commission should not begin proceedings for appointment of a receiver to operate the Yermo water system. The order was based on Section 855 of the Public Utilities Code7 which states:
Whenever the commission determines, after notice and hearing, that any water or sewer system corporation is unable or unwilling to adequately serve its ratepayers or has been actually or effectively abandoned by its owners, or is unresponsive to the rules or orders of the commission, the commission may petition the superior court for the county within which the corporation has its principal office or place of business for the appointment of a receiver to assume possession of its property and to operate its system upon such terms and conditions as the court shall prescribe. The court may require, as a condition to the appointment of such receiver, that a sufficient bond be given by the receiver and conditioned upon compliance with the orders of the court and the commission, and protection of all property rights involved. The court shall provide for disposition of the facilities and system in like manner as any other receivership proceeding in this state.
The investigation also ordered Respondents to submit in writing to the Water Division Director no later than May 23, 2008: (a) verification of any and all financial data stated in Yermo's Annual Reports for the period 2003 through 2005; 8 (b) a listing, for all customers, of the name, billing address, classification, type of service, and date and amount of last billing;9 and (c) a copy of Yermo's customer complaint log and complaint data required by G.O. 103 for the period 2002 through 2007.10
At a June 11, 2008 Prehearing Conference (PHC) in San Francisco, Respondents were ordered to make a compliance filing with the Commission's Docket Office by July 28, 2008 explaining the status of Yermo's Public Utilities Commission reimbursement fees (user fees) and to submit Yermo's 2007 Annual Report to the Commission. Respondents were also ordered to explain why Yermo is not being operated by a State certified water operator and to identify when such a person would begin operating the water system.
4 CDPH was formerly known as the California Department of Health Services.
5 Division of Water and Audits was previously known as the Water Division.
6 Investigation 08-04-032, mimeo. at 2.
7 All statutory references are to the Public Utilities Code.
8 Although G.O. 104 requires Respondent to submit an Annual Report on or before March 31 of the following year signed by the owner under penalty of perjury, this information, except for Yermo's 2007 Annual Report, was subsequently submitted to the Commission in July of 2008. The 2007 Annual Report was submitted in October of 2008.
9 This information was subsequently submitted to the Commission on July 28, 2008.
10 This information was subsequently submitted to the Commission on July 28, 2008.
