Clearing Regulatory Hurdles to Provide a Reliable Water System for Montebello Residents

We obtained regulatory approval from the California Public Utilities Commission (CPUC) on behalf of the San Gabriel Valley Water Company so it could acquire the City of Montebello’s water system and associated assets.

In 2012, the Montebello City Council (Montebello) decided to dispose of its 2,300 customer municipal water system because it had been operating at a significant deficit due to increased costs of operations, maintenance and necessary infrastructure development. They agreed to sell it to our client, San Gabriel Valley Water Company (San Gabriel). Voters initially nixed the deal, but the Legislature enacted a special bill allowing three municipalities, including Montebello, to sell water systems entirely within their city limits without voter approval.

Montebello again chose San Gabriel’s now richer offer to purchase, and San Gabriel inked a deal and filed an application for the CPUC’s approval. However, the CPUC’s ratepayer advocates noticed that a few commercial customers of Montebello’s system were outside city limits. They persuaded the assigned CPUC Commissioner to deny the application as contrary to the statute, which required the water system assets being proposed for purchase be wholly within the boundaries of Montebello.

We persuaded the Commissioner to defer a decision while the Legislature considered a bill to remove the city limits barrier. Upon enactment, the CPUC resumed its review of San Gabriel’s application and finally addressed the merits of the planned acquisition.

After careful review, the CPUC approved our client’s application, allowing it to move forward with the purchase. San Gabriel is now able to add to its rate base while Montebello water service customers are ensured long-term access to clean and safe water service.