CONTACT: Kyle DeVine October 22, 1997 CPUC - 564
213-897-4225 R.___________

CPUC CONSIDERS CHANGING WATER INDUSTRY REGULATION

The California Public Utilities Commission (CPUC) is considering changing its rules and guidelines for water industry mergers and acquisitions, and maximizing use of services to better address changes occurring in this industry.

The Commission invites the industry, consumer groups and anyone interested in helping to craft these rules to, within the next 30 days, propose policies or comment on questions the Commission posed today. The Commission anticipates having changes in place early next year.

The Commission usually supports the acquisition of small troubled water companies by large ones as a way of resolving the small water companies' financial and water quality problems which are passed on to customers through high water bills and bad-looking, -smelling, or -tasting water. The Commission wants to provide incentives for mergers and acquisitions which benefit ratepayers and invites parties to propose policies consistent with new legislation that sets fair market value as the standard for assessing the reasonableness of the acquisition price.

To get the maximum use of utility resources, the Commission is looking at ways water companies may contract out services such as billing and maintenance. It invites parties to propose policies and comment on questions such as, does the provision of services pose risk to ratepayers and if so, how should they be protected, should customers be required to make up for losses or share in any profits?

The water industry and organizations already involved in this proceeding will receive the complete list of questions in the mail. Those not yet involved in the proceeding who wish to become involved, and comment on the questions, may do so by contacting the CPUC Public Advisor's office at 415-703-2074. These questions are also available on the CPUC Web page [www.cpuc.ca.gov] .