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MONTEREY PENINSULA WATER MANAGEMENT DISTRICT BOARD

To address an emergency supply issue and avoid potential imposition of fines by the State Water Resources Control Board, California American Water has filed an application with the California Public Utilities Commission seeking an immediate, temporary, emergency increase in upper block rates for all water service connections, and the flat rates charged to non-essential use customers for customers receiving service in its Monterey District in the incorporated cities of Monterey, Pacific Grove, Carmel-by- the-Sea, Del Rey Oaks, Sand City, a portion of Seaside, and certain unincorporated areas in the County of Monterey.

California American Water has requested the increases be imposed on an emergency basis, pending hearings, if required, and should continue only until November 1, 2004, when California American Water's authorized winter rates for its Monterey District will got into effect. The proposed rate increase will only affect customers using excessive amounts of water, or those customers using most of their water for outdoor watering.

California American Water is requesting that it be allowed to increase rates by varying percentages for residential and multiresidential customers and that it be allowed to increase the rates for golf courses, public authority and special use customers. For the residential and multi-residential customers we propose to double the current rates for the 4th and 5th rate blocks. We propose to double the rates for public authority and the second block for other use customers, triple the rates for golf course customers and increase the rates by 50% for special use customers.

The goal is to increase rates for non-essential uses; that is, outdoor watering, and to limit use to essential indoor uses. The upper two rate blocks for residential and multi-residential customers and second block for commercial customers are designed to cover is outdoor watering. The first block for all other customers is set a level that would provide sufficient water for normal consumption needs. All other customers are made up primarily of commercial, public authority, special use and other outdoor watering entities. The increase in rates for golf courses and public authority customers is based on the simple fact that these entities have control over the water they use, which is mostly for outdoor usage. The goal is not to impact the cost of water for essential uses but to dramatically impact usage for outdoor water use.

The current tariff and the specific rate increases requested are summarized below. The changed rates are underlined.

The Commission's independent Office of Ratepayer Advocates (ORA) is reviewing this proposal. ORA consists of analysis, engineers, economists and other regulatory professionals that represent the long-term interests of all utility ratepayers. When it is released, copies of ORA's analysis will be available to the public by request from the Public Advisor's Office.

If public participation hearings (PPHs) are scheduled, each customer will be notified of the dates, times, and locations. PPHs are one opportunity to express your review regarding California American Water's application to temporarily increase its rates. You are also encouraged to write or e-mail your opinions, concerns and comments to the Public Advisor's Office (see below). These comments will be circulated to the Commissioners, the assigned Administrative Law Judge (ALJ) and appropriate staff and will become part of the formal correspondence record for this proceeding.

Evidentiary hearings (EHs) may also be held where parties will present their testimony and evidence. EHs are open to the public but only those wishing to present evidence or cross-examine witnesses may directly participate in the hearing process. Parties at these hearings may offer proposals to the Commission that differ from those requested by California American Water. If you wish to become a party and participate in the evidentiary hearings, please contact the Commission's Public Advisor at the address shown below.

After considering all of the proposals and evidence presented, the assigned ALJ will issue a proposed decision. When the Commission issues a final decision on California American Water's application, it may adopt all or part of the ALJ's proposed decision as written, amend or modify it, or deny the Application. The Commission's final decision may be different from California American Water's proposal.

If you wish to participate in this proceeding, or if you would like to send written comments to the Commission, please contact the Public Advisor's Office at the address below. The Public Advisor's Office was established to help you participate in Commission proceedings. Persons with disabilities who need reasonable accommodations, for example sign language interpretation, in order to participate in this proceeding should contact the Public Advisor's Office at (415) 703-2074 or toll free at 1-866-849-8390, TTY tel.# (415) 703-5282 or toll free TTY at 1-866-836-7825. Requests for foreign language interpreters should also be directed to the Public Advisor's office at these numbers.

California Public Utilities Commission
Public Advisor's Office
505 Van Ness Avenue, Room 2103
San Francisco, CA 94102
1-866-849-8390 or 1-415-703-2074
or by e-mail to public.advisor@cpuc.ca.gov

Please refer to Application No. A.04-06-020

A copy of the Application may be inspected at: California American Water's local business office at 50 Ragsdale Drive, Monterey, CA 93940, or at the Commission's San Francisco office at 505 Van Ness Avenue, San Francisco, CA 94102.