ALJ/GW2/jt2 Date of Issuance 3/29/2011

Decision 11-03-043 March 24, 2011

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of California Water Service Company (U60W), a California Corporation, for an Order authorizing the allocation of Net Proceeds from MTBE (methyl tertiary-butyl ether) Groundwater Contamination Litigation.

Application 09-07-011 (Filed July 8, 2009)

DECISION DEFERRING REMAINING ISSUES TO A GENERAL RATE CASE AND CLOSING PROCEEDING

1. Summary

This decision closes the proceeding in which California Water Service Company (Cal Water) has sought authority for the allocation of net proceeds from litigation pertaining to the contamination of groundwater by methyl tertiary-butyl ether (MTBE).

Earlier, in Phase I of the proceeding, the Commission issued Decision (D.) 10-04-037 that adopted a settlement reached between the parties and allowed the existing MTBE Litigation Memorandum Account to be amended to track the use of funds to construct treatment and replacement facilities. The available funds from the MTBE litigation settlement, determined to be $34,254,417.07 subject to adjustment based on specified contingencies, were ordered to be used for the construction or purchase of MTBE treatment and replacement facilities.

The proceeding remained open for Phase II, until a separate rulemaking proceeding (Rulemaking 09-03-014), produced both an applicable definition of "net proceeds" and rules for the accounting treatment of contamination proceeds by Commission-regulated water companies, which occurred in D.10-10-018 and D.10-12-058. Upon the conclusion of the rulemaking Cal Water and the sole protestant, Division of Ratepayer Advocates, jointly moved to close this proceeding on the basis of an agreement (see Memorandum of Understanding, attached to this decision as Appendix A) deferring to future General Rate Cases (GRC) the resolution of unresolved Phase II issues.

This decision concludes that the issues previously set for resolution in Phase II of this proceeding either have been recently resolved by actions of Cal Water and D.10-10-018, the generic contamination proceeds rulemaking, are not ripe for resolution or can be more efficiently addressed within a future GRC. As a result, the decision defers the remaining issues to a future GRC and closes the proceeding.