Common use of THE APPLICATION Clause in Contracts

THE APPLICATION. 3.1 On September 14, 2018, in the above-captioned matter, California American Water filed an Application for Order Authorizing California-American Water Company (U-210- W) to Purchase Bellflower Municipal Water System’s Assets and for Related Approvals (the “Application”).1 On January 22, 2019, California American Water filed an Amended Application for Order Authorizing Sale and Purchase of Utility Assets (“Amended Application”).2 3.2 The Amended Application requests the Commission approve the Asset Purchase Agreement,3 the transaction contemplated in that Agreement (“Acquisition”), and certain related matters. Specifically, the Amended Application requests a Commission Order that: (i) Approves the Asset Purchase Agreement’s terms and conditions. (ii) Expands California American Water’s Certificate of Public Convenience and Necessity (“CPCN”) so the company may assume all public utility responsibilities for the operation and ownership of the water utility operations in Bellflower Municipal’s current service area. (iii) Establishes the rate base of the acquired system, at the time of approval of a decision in this application, to be the full purchase price paid by California American Water for the Bellflower Municipal system’s assets covered by the Asset Purchase Agreement. (iv) Authorizes the creation of a memorandum account in the event that the Commission has not adopted a decision approving the Acquisition in time to allow California American Water to incorporate the results of the decision approving the Acquisition in California American Water’s 2019 General Rate Case (“GRC”). That memorandum account would capture the differences between revenues billed at current rates and revenues that would have been billed under the final rates effective January 1, 2021, if the Bellflower system were integrated for ratemaking following the decision in California American Water’s 2019 GRC. The associated revenue requirement will consist of items including, but not limited to, return on investment, ad valorem tax, depreciation, general office costs, other taxes and fees, and incremental operating expenses. (v) Allows California American Water immediate consolidation of the Bellflower system into the Los Angeles District for operational purposes. 1 ▇▇▇▇▇://▇▇▇▇.▇▇▇▇.▇▇.▇▇▇/PublishedDocs/Efile/G000/M230/K156/230156793.PDF. 2 ▇▇▇▇▇://▇▇▇▇.▇▇▇▇.▇▇.▇▇▇/PublishedDocs/Efile/G000/M259/K972/259972546.PDF. 3 The Asset Purchase Agreement refers to the purchase and sale agreement, entered November 27, 2017, between California American Water and the City, a copy of which was included as “Attachment 1” to the Amended Application. (vi) Allows California American Water to integrate the Bellflower system into the Los Angeles District (and Corporate Office) for ratemaking as of January 1, 2021. The rates for Bellflower customers from January 1, 2021 forward would be determined in the 2019 GRC filed on July 1, 2019. (vii) Establishes a transaction memorandum account, pursuant to Commission Standard Practice U-27-W, to track all transaction related costs with rate treatment determined in California American Water’s subsequent GRC. (viii) Approves California American Water’s request to allow tracking of costs of addressing any required environmental improvements and compliance issues in the already established memorandum account related to the same issues for the Dunnigan, Geyserville, and Meadowbrook acquisitions. (ix) Approves the Agreement between California American Water and the Bellflower-Somerset Mutual Water Company (“Bellflower- Somerset Mutual”) for Transmission and Production of Water from the High Capacity Well (“HCW1”), executed October 20, 2017 (the “Wheeling Agreement”).4