ALJ/DUG/gd2 Date of Issuance 8/3/2009

Decision 09-07-051 July 30, 2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of California Water Service Company (U60W) for Authority to Establish its authorized Cost of Capital for the period from January 1, 2009 through December 31, 2011.	Application 08-05-002 (Filed May 1, 2008)
And Related Matters.	Application 08-05-003 Application 08-05-004

(See Attachment B for List of Appearances.)

DECISION ADOPTING A SETTLEMENT ON AN ADJUSTMENT
MECHANISM TO THE BASE YEAR 2009 COST OF CAPITAL FOR THE THREE LARGE MULTI-DISTRICT CLASS A WATER UTILITIES:
 CALIFORNIA WATER SERVICE COMPANY, CALIFORNIA AMERICAN WATER COMPANY, AND GOLDEN STATE WATER COMPANY

TABLE OF CONTENTS

Title Page

DECISION ADOPTING A SETTLEMENT ON AN ADJUSTMENT MECHANISM TO THE BASE YEAR 2009 COST OF CAPITAL FOR THE
THREE LARGE MULTI-DISTRICT CLASS A WATER UTILITIES: CALIFORNIA WATER SERIVCE COMPANY, CALIFORNIA AMERICAN WATER COMPANY, AND GOLDEN STATE WATER COMPANY 2

1. Summary 2

2. Water Cost of Capital Adjustment Mechanism Settlement 2

2.1. Summary 2

2.2. Proposed Settlement 3

2.3. Settlement Rules 5

2.4. Satisfying the Settlement Rules 6

2.4.1. Reasonable in Light of the Whole Record 6

2.4.2. Consistent With Law 7

2.4.3. In the Public Interest 7

3. 2008 Financial Markets Dislocation 8

3.1. Summary of Findings 10

3.2. Testimony 10

3.2.1. Debra Coy 11

3.2.2. Susan Abbott 12

3.2.3. Randall Woolridge 12

3.2.4. Commercial Paper 14

3.3. Discussion 17

4. Comments on Proposed Decision 21

5. Assignment of Proceeding 22

Findings of Fact 22

Conclusions of Law 23

ORDER 24

ATTACHMENT A - Settlement Agreement

ATTACHMENT B - List of Appearances

DECISION ADOPTING A SETTLEMENT ON AN ADJUSTMENT MECHANISM TO THE BASE YEAR 2009 COST OF CAPITAL FOR THE THREE LARGE MULTI-DISTRICT CLASS A WATER UTILITIES: CALIFORNIA WATER SERIVCE COMPANY, CALIFORNIA AMERICAN WATER COMPANY, AND GOLDEN STATE WATER COMPANY

1. Summary

This decision adopts a settlement for a subsequent years' adjustment mechanism to the base year 2009 ratemaking return on common equity for California Water Service Company, California American Water Company, and Golden State Water Company. The Commission adopted a 2009 base year cost of capital for each of the three companies in a separate phase 1 decision. In this Phase 2 decision, we also review the impact of the financial market dislocation on the 2009 base year return on equity following the February 13, 2009 evidentiary hearing and determine there are no further actions necessary at this time.