JB2/KOT/niz 5/11/2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Joint Application of California Water Service Company and Grand Oaks Water Company to transfer ownership of the assets of Grand Oaks Water Company to California Water Service Company under Certain Terms and Conditions and to transfer the Certificate of Public Convenience and Necessity to provide water service to the name of California Water Service Company.

Application 05-12-012 (Filed December 12, 2005)

JOINT RULING OF ASSIGNED COMMISSIONER AND ADMINISTRATIVE LAW JUDGE RESPONDING TO APRIL 20, 2006, STATUS UPDATE

Summary

The Division of Ratepayer Advocates (DRA) reports in its April 20, 2006, Status Update (attached) that the Golden Hills Community Services District (GHCSD) may be interested in acquiring the Grand Oaks Water Company (Grand Oaks), provided certain conditions are met. We welcome GHCSD's interest for several reasons.

First, GHCSD is immediately adjacent to Grand Oaks and appears well-situated to acquire that system. GHCSD already serves about 2,700 customers, while Grand Oaks serves only about 40.

Second, DRA has opposed acquisition of Grand Oaks by California Water Service Company (Cal Water) under the ratemaking conditions proposed by Cal Water. DRA has sought and received permission from the Commission and from the joint applicants in this proceeding to look for alternative acquirers. GHCSD may be an appropriate alternative.

Third, Cal Water itself is a reluctant acquirer. Its own facilities are some 50 miles away from Grand Oaks, and it has been operating Grand Oaks only as an accommodation after the now-deceased active owner proved unwilling or unable to operate the system in compliance with applicable standards.

By this ruling, we endorse GHCSD's plan for further exploring its potential acquisition of Grand Oaks, and we modify our schedule to provide time for the feasibility studies and meetings as described by Mike Sides, GHCSD's Assistant General Manager.