Conditions of Approval of Transfer of Control
1. The transfer of control shall have no effect on the Commission's authority over Valencia Water Company's (Valencia) provision of public utility service to the public.
2. Valencia shall comply with all applicable California and federal laws and administrative regulations.
3. All owners, direct and indirect, of Newhall Land and Farming Company shall ensure that Valencia has adequate capital to fulfill all of its public utility service obligations. The term "capital" encompasses "money and property with which a company carries on its corporate business; a company's assets, regardless of source, utilized for the conduct of the corporate business and for the purpose of deriving gains and profits; and a company's working capital," and is not limited to mean only "equity capital, infrastructure investment, or any other term that does not include, simply, money or working cash." Decision 02-01-039, Findings of Fact 5 and 6, 2002 Cal. PUC LEXIS 5 *57.
4. Valencia shall continue to maintain its books and records in accordance with all Commission rules. Valencia's books and records shall be maintained and housed in California.
5. The transfer of control may not adversely affect Valencia policies with respect to service to customers, employees, operations, financing, accounting, capitalization, rates, depreciation, maintenance, or other matters relating to the public interest or utility operations.
6. There shall be no adverse impact on customer service as a result of the transaction. All owners, direct and indirect, of Newhall Land and Farming Company shall maintain Valencia's commitment to high quality public utility water service and community involvement.
7. Valencia shall maintain its business headquarters in California together with fully operational local offices as appropriate to maintain the high quality of customer service and community involvement. Valencia shall not close any of its offices as a result of this transaction.
8. Valencia shall maintain or improve its practices and policies for addressing the ammonium perchlorate pollution plume in Valencia's groundwater source.
9. The transfer of control shall not result in changes to the existing management and officers of Valencia.
10. Operational control of Valencia shall continue to be exercised by Valencia's board of directors and management.
11. There shall be no changes in any existing union agreement as a result of the transaction. All collective bargaining agreements will be honored.
12. No additional layer of management overhead may be allocated to Valencia as a result of the transaction. Newhall Land and Farming Company and its upstream owners' costs may not be included in Valencia's revenue requirement absent a compelling demonstration of benefit to Valencia and its customers.
13. None of the outstanding debt owed and recorded as liabilities on the regulated books of Valencia may be adversely affected by the transfer of control. There shall be no changes in the income statement, balance sheet or financial position of Valencia used for ratemaking purposes as a result of the transfer of control.
14. The ratepayers of Valencia shall not incur, directly or indirectly, any transaction costs or other liabilities or obligations arising from the transfer of control. Valencia shall not incur any additional indebtedness, issue any additional securities, or pledge any assets to finance any part of the transfer of indirect control.
15. All transaction-related costs, including external advisors, early termination costs, and change in control payments as a result of the transfer of control, shall not be "pushed down" to Valencia or otherwise reflected in Valencia's accounting records used for ratemaking purposes, and there shall be no attempt to recover such costs in any future rate proceeding.
16. Affiliated companies of Valencia shall take no actions that would impair Valencia's ability to fulfill its public utility obligation to serve or to operate in a prudent and efficient manner.
17. Valencia may not grant preferences to an affiliated firm's real estate development when evaluating whether Valencia can or will extend water service to the development.
18. Valencia shall comply with the Affiliated Interest Transaction Rules set out in Appendix C to this decision, subject to modification by a final decision in Rulemaking 09-04-012, Commission Rulemaking to develop standard rules for the use of regulated assets for non-tariff services of water utilities.
(END OF APPENDIX B)
