Pub. Util. Code, § 789.1

The Legislature finds and declares all of the following:

(a) Water corporations currently are faced with, and will continue to be faced with, increasing demands for new infrastructure, plant, and facilities to comply with increasingly strict state and federal safe drinking water laws and regulations.

(b) The state’s limited water supply will require investment by water corporations in infrastructure, plant, and facilities to develop new sources of supply, make existing sources of supply more reliable, and encourage and implement water conservation measures including water reclamation and reuse.

(c) Water corporations also are faced with the need to replace or upgrade water infrastructure, plant, and facilities and to design and construct all of those replacements and improvements to meet the governing fire flow standards for public fire protection purposes.

(d) Water corporations may, from time to time, own real property that once was, but is no longer, necessary or useful in the provision of water utility service and that now may be sold. It is the policy of the state that water corporations be encouraged to dispose of real property that once was, but is no longer, necessary or useful in the provision of water utility service and to invest the net proceeds therefrom in utility infrastructure, plant, facilities, and properties that are necessary or useful in the provision of water service to the public.

(e) It is the policy of the state that any net proceeds from the sale by a water corporation of real property that was at any time, but is no longer, necessary or useful in the provision of public utility service, shall be invested by a water corporation in infrastructure, plant, facilities, and properties that are necessary or useful in the performance of its duties to the public and that all of that investment in infrastructure, plant, facilities, and properties shall be included among the other utility property of the water corporation that is used and useful in providing water service and upon which the commission authorizes the water corporation the opportunity to earn a reasonable return.