James Hunter

Saturday, September 13, 2014

Mercury News, "Dry Times: An in-depth discussion about Bay Area water issues"

The Mercury News sponsored a public forum, "Dry Times: An in-depth discussion about Bay Area water issues", to review the current status of the drought affecting California. The moderator was Lisa Krieger, presenters were Paul Rodger (Mercury News), Jim Fielder (SCVWD) and John Tang (SJWC).

The focus was on the basic info concerning the drought and conservation efforts. Paul Rodger had some good points regarding the drought and historically what droughts and when had occurred, as well as general information. There was a bit of discussion covering the aquifers in the Santa Clara valley and the use for water storage, as well as the fact we are drawing heavily on our wells during the current drought.

The discussions avoided really addressing the tough economic questions that will affect consumers (ratepayers). The utility representatives presented slide presentation emphasising conservation, fixed costs and requirement to import water. This is understandable as SJWC and SCVWD are compensated by the state or by increases in our rates.

The reality can be simply shown by, the installation of a low-flow toilet. You can apply and get as much $150 rebate. Minimum your going to spend $500 total for toilet and installation. You use less water, but due to the MCRAMA, (Mandatory Conservation Revenue Adjustment) currently in effect. Our rates will be adjusted, to protect SJWC revenue/profits.

So what does the ratepayer get besides the satisfaction of being a good citizen-that doesn't pay any bills! We can hope that we reduce our water use so we can achieve a monthly water cost reduction sufficient to pay for the costs. The example, toilets use 22% of water use ($76 monthly was noted in the meeting, higher than most numbers showed in the recent GRC documents), if we reduce toilet water use by 50% we would save $8.35, so $350/$8.35 = 42 months, to breakeven. Unless the other shoe drops and it will, SCVWD increases it's charges for water, resulting in SJWC invoking their MCRAMA, (Mandatory Conservation Revenue Adjustment) and raising our water rates and the financial savings decrease and the breakeven point disappears into the future..

The question really avoided was what do we do in a protracted drought, 10 years? The water re-cycling seems to be the best approach, but will take 10 years and then only supply 5-10% of the needs.

So we are faced with conservation, as the fastest method, definitely cheapest for the utilities, of addressing the drought. Cheapest for the utilities because we are paying for it indirectly through out water rates and taxes, as I pointed out subsidizing the the cost of water conservation upgrades to our homes. We can only hope that as the water utilities and state government will make it more financially attractive for consumer (ratepayers) to install conservation upgrades in their homes.

I hope that the Mercury News conducts more meetings with a practical focus on consumer (ratepayer) water conservation. Addressing the very practical and economic matters that will affect the adoption of many of the ways to conserve. This would hopefully encourage more consumer conservation.

Blogger comment: John Tang wasn't very clear in his statements regarding WRAM, to clarify that:
Excerpt, SJWC Advice Letter No. 456 to CPUC
The decision of CPUC stated: As the current dry years persist, and the need for conservation of water resources continues, the Commission will consider in SJWC’s next GRC, if not before, whether SJWC’s current Monterey-Style WRAM is a useful water conservation mechanism that balances the risks of lost or increasing sales between the utility and its customers. In addition SJWC also requested and was granted an MCWRAM:The existing MCMA and MCRAMA were originally authorized by the Commission through AL 407-D in August of 2009 after significant vetting by DWA. The language for the accounts is still in SJWC’s Preliminary Statement. These memorandum accounts meet all of the requirements of the Drought Procedures, including: Maintaining separate memorandum accounts for tracking conservation expenses and lost revenues associated with reduced sales; Recognition that the memorandum accounts are opened in concurrence with SJWC’s  activation of the Rule 14.1.A voluntary conservation measures; and  Recognition that before seeking recovery of the memorandum account balance, the balance shall be reduced by an amount equal to a 20-basis point reduction in the utility’s most recently adopted return on equity. The Drought Procedures further specify that only companies without a full Water Revenue Adjustment Mechanism (WRAM) in place may request adding a memorandum account to track lost revenue associated with reduced sales as a result of activating either voluntary conservation under Rule 14.1 or mandatory rationing under Schedule 14.1. At this time SJWC does not have a full WRAM in place. SJWC does have a Monterey-style Water Rater Adjustment Mechanism (WRAM) in place at this time. The Monterey style WRAM currently in place for SJWC’s residential customer group is not a revenue decoupling mechanism but rather a price (rate) adjustment mechanism. As recognized by the Office of Ratepayer Advocates and SJWC in the Settlement Agreement regarding the implementation of SJWC’s Monterey WRAM ultimately adopted by the Commission in D.08-08-030: 
Basically  SJWC has Monterey-style Water Rate Adjustment Mechanism, in place. Earlier this year based on the Drought declaration SJWC submitted and was granted a Mandatory Conservation Revenue Adjustment Memorandum Account (MCRAMA). This provides additional protection to SJWC for revenues and profits, during a declared drought and further protect SJWCs revenue from conservation effects. In other words we the ratepayers are guaranteeing SJWC revenue and profits during the drought, even though CPUC didn't grant them a full WRAM in the recent GRC. I expect them to continue trying to get the full WRAM, as I'm sure the analysts that watch the SJW Corp. stock will take notice and the price per share is likely to increase.

If you appreciated the opportunity and have suggestions regards other drought related Mercury News Forums, send suggestions to:

Martin G. Reynolds mreynolds@bayareanewsgroup.com

Wednesday, August 13, 2014

What is our water rate going to be? (SJWC GRC A1201003, Rate Increase)

The following is from the published agenda for tomorrow's CPUC Consent Hearing, page 19.

 CPUC Consent Hearing, 14 August 2014, page 19

We can easily see that San Jose Water Company has proposed $95,154.000 million, the ALJ Proposed Decision is $48,998,000 million and the very misleading "Estimated Cost" of $22,063,000?

CPUC must buy their calculators at the same place I got mine....................................

ORA (Office of Ratepayer Advocates aka DRA) in their "Comments" to the Proposed Decision pointed out  as follows: (refer to page 2)
A. The Commission Commits Technical Error if it Does not
Ensure That the PD Is Consistent With Amounts
Presented in Attachment A 
On pages 2, 126, and 130, the PD’s summary of the increase in an average residential customer’s bill should match the amounts indicated in the PD’s Attachment A. Additionally, the PD should clarify that the summarized increase in a customer’s monthly bill pertains only to base rates and does not include any authorized surcharges that may also appear on a monthly bill. Using the rates indicated in Table I of the PD’s Attachment A, a residential customer with a 5/8” by 3/4” meter using 15 ccf per month would incur base rate charges of $67.41 (not including surcharges), which is significantly higher than the $46.20 indicated on page 2 of PD. 
I reviewed the published documents and wasn't able to confirm this was taken into consideration by either CPUC or the ALJ.

The $22,063,000 in 2013 was also questioned by ORA (Office of Ratepayer Advocates aka DRA) in their "Comments" to the Proposed Decision: (refer to page 4)
SJWC’s most recent annual report4 with the Commission, on pages 8 and 9, indicates that SJWC earned an actual return on equity in 2013 of 8.14%. Since the PD increases rates by amounts designed to increase revenue by $22,063,000 in 2013 (a year now concluded—in which no new expenses or capital costs will be incurred) an additional $22,063,000 of revenue translates into additional income of approximately $13,000,000, after taxes, and an effective return on equity of 12.16%. 
The Commission’s PD implicitly endorses a return on equity of 12.16% for SJWC, and the PD should provide an explanation on how such implicit endorsement reconciles with SJWC’s most recent cost of capital decision. In that decision, the Commission expressed concern that the settled 9.99% return on equity “may be somewhat excessive.  
 If the Commission is not prepared to implicitly endorse a return on equity greater than 12% for a regulated monopoly, the PD should consider further adoption of ORA’s recommendations contained within the evidentiary record. 


LAST CHANCE TO MAKE YOUR OPINION HEARD
IF YOU WANT TO KNOW IF CPUC KNOWS 
WHAT THE SJWC RATE INCREASE IS?


Please send email, make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase and the simple fact that we don't know how much were going to pay monthly, to SJWC, for our water and we're not sure CPUC knows! and they plan to vote in four days.

You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

Sunday, August 10, 2014

San Jose Rate Increase, How much will we pay?

San Jose Rate Increase, How much will we pay? CPUC will vote Thursday 14th August 2014

CPUC will consider the ALJ Proposed Decision, Comments and Replies from SJWC & ORA, at the Consent Hearing in 4 days!

The estimated cost to ratepayers is estimated at $22,063,000 (yes that's millions), so if we divide the 22 million by the approximate number of SJWC water connections 225,000, it appears to be about $100 over three years. If we look at the Proposed Outcome below, $7.96 is estimated the monthly increase, in 2013 test year, plus higher rates in 2014 and 2015. it's possible to estimate $8.00 per month times 36 months gives us $288 total increase?

Fellow ratepayers I'm confused! After 30 months of negotiation between SJWC and ORA/DRA, with CPUC representing "our interests" the increase seems greater than the estimated 22% or the original mythical 44% . As a matter of fact an increase of 20.8% is referenced in the Consent Hearing "Proposed Outcome" for the test year of 2013.

See page 2 of the Office of Ratepayer Advocates, Comments. ORA disagrees:
Using the rates indicated in Table I of the PD’s Attachment A, a residential customer with a 5/8”by 3/4” meter using 15 ccf per month would incur base rate charges of $67.41 (not including surcharges), which is significantly higher than the $46.20 indicated on page 2 of PD. 
This indicates the minimum increase would be $67.41 - $38.24 = $29.17 which is 

a staggering increase of 77%
(for the test year of 2013)

 As at ratepayer I'd like to see the number that CPUC will consent to and what are we really going to have to pay, before they vote! So to be fair it's very complicated ............... the other implication is the effective increase is really not $22 million, it's really, if we take $29.00 monthly increase x 36 months = $1044 x 225,000 =  $251,100,000

$235,000,000 that's a really big number
(my calculator must be broken)

Is it unreasonable to expect to know what CPUC is going to vote on? Is it unreasonable to question whether CPUC Commissioners know what they're voting on? Is it unreasonable to know much we'll pay to SJWC per month? CPUC needs to tell us the (ratepayers) what their going to vote on - on Thursday in 4 days!

=======================================================================
Public Agenda 3340                                                                                 Thursday, August 14, 2014
Consent Agenda - Orders and Resolutions (continued)

18                                 San Jose Water Company's General Rate Increase for 2013,
[13130]                        2014, and 2015

In the Matter of the Application of San Jose Water Company for an Order authorizing it to increase
rates charged for water service by $47,394,000 or 21.51% in 2013, by $12,963,000 or 4.87% in 2014, and by $34,797,000 or 12.59% in 2015.

PROPOSED OUTCOME:
  • Authorizes San Jose Water Company (SJWC) to increase rates by amounts designed to increase revenue by $22,063,000 or 9.79% in its test year 2013, $11,579,000 or 4.72% in 2014, and $15,356,000 or 6.02% in 2015.
  • As a result of the revenue increase granted by this decision, the monthly bill for the average SJWC residential customers using 1500 cubic feet of water with a 5/8" by 3/4" meter would increase by $7.96 or 20.8% to $46.20 from $38.24 for the test year 2013.
  • Closes the proceeding. 
SAFETY CONSIDERATIONS:
  • Pursuant to Public Utilities Code Section 451, SJWC must take all actions necessary to promote the safety, health, comfort, and convenience of utility patrons, employees, and the public.
ESTIMATED COST:
  • $22,063,000.
(Comr Sandoval - Judge Wilson)
htp://docs.puc.agov/SearchRes.apx?docfrmat=AL&docid=9840303 ** Proposed Decision

Pub. Util. Code § 311 – This item was mailed for Public Comment.
Pub. Util. Code §1701.1 -- This proceeding is categorized as Ratesetting.
=======================================================================

If you think the participants should be able to tell us (ratepayers) how much we'll pay for water, to San Jose Water Company , after 30 months of negotiating, please do the numbers and send an email.

Please send email, make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase and the simple fact that we don't know how much were going to pay monthly, to SJWC, for our water and we're not sure CPUC knows! and they plan to vote in four days.

You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

Friday, August 8, 2014

San Jose Water Company's Rate Increase is on CPUC's 14 August Agenda

CPUC will consider the SJWC GRC (General Rate Increase) A1201003, at the August 14, 2014 Consent Hearing. The agenda is available at the CPUC website, the SJWC is on page 19.

The Comments were submitted on July 31st by ORA/DRA and SJWC. ORA/DRA comments addressed the following items:

SJWC is trying to re-open the entire case again, refer to page 1 & 2 of the ORA Comments.

"SJWC’s Comments Amount to an Additional Round of Briefing Intended to Re-litigate This Proceeding SJWC’s comments do not comply with Rule 14.3(c). Instead of focusing on factual, legal, or technical errors, SJWC served 25 pages 1 of comments that represent a fourth round of briefing in this case.. Because they do not comply with Rule 14.3, the Commision should disregard SJWC’s comments."

"............SJWC, on the other hand, chose to re-argue issues. For example, SJWC asserts
that “[t]he Proposed Decision not only ignores SJWC’s rebuttal evidence supporting the
Company’s 3-tier proposal; it fails to address SJWC’s proposal to retain the existing 2-
tier ate design if a WRAM/MCBA is not authorized..Not only is this assertion
irrelevant, it is incorrect. In fact, the PD specifically recognizes that, “SJWC’s  three-tier
residential rate design proposal is conditioned upon concurrent Commission's approval of
its proposal for a full [WRAM/MCBA]. Absent approval of the WRAM/MCBA, SJWC
proposes to retain its present two-tier residential rate design.The Commission's simply
decides, after weighing the record, to adopt ORA’s proposed rate design.9
This type of argument pervades SJWC’s comments."


"Section O of SJWC’s comments is the only section that comments on a factual
error in the PD. That section addresses Test Year 2013 Rent Expense.10 In rebuttal
testimony, SJWC changed its Test Year 2013 Rent Expense estimate to $382,00.1 At
hearing, ORA’s witness agreed that $382,00 is an appropriate amount for Test Year
2013 Rent Expense.12 This is the only section of SJWC’s Opening Comments that he
Commision should adopt."


SJWC’s disregard for the Commission’s Rules in its opening comments is not
limited just o re-briefing this rate case. Additionally, SJWC attempts to use extra-record
evidence to sway the Commission's. For example, SJWC argues for the funding of more
employe positions by claiming over the two years since briefs were filed in this
GRC, SJWC has found it necessary, despite uncertainty as to the disposition of its
application, to fill some of the 27 additional positions proposed in Ms. Leal’s testimony.
As of this date, eleven of those positions have been filed . .This argument is
contrary to Commission's rules. Not only did the Commission's weigh the record evidence
and make its decision on labor and payroll expense, but SJWC now attempts to
introduce evidence that is not part of the record, that is not sponsored by a witness, and
that no party has a chance to subject o cross-examination."

Bloggers comment: In simple english, not legalize, ORA specifies SJWC Comments are not in compliance with specific CPUC rules, further that SJWC is attempting to re-argue items resolved in the ALJ's Proposed Decision and argued by SJWC over the past 30 months, but to sway the Commissioners, by attempting justify actions not in compliance, by justifying the action, by the action itself. I think the French term is "fiat accompli" (A thing that has already happened or been decided before those affected hear about it, leaving them with no option but to accept) This is not a valid legal argument. It's also interesting that SJWC is also trying to tie the change from two to three tier residential pricing, to the WRAM de-coupling sales and revenue. That appears to be a rather blatant effort to sway the CPUC Commission.
Several of the tactics I see were mentioned, in a previous blog, "SJWC Rate Increase, "Follow the money", I said, "a strategy commonly used by the losing negotiator is to "make it more complicated", challenge everything and run the other negotiator out of time/resources, ask for "so many things" you'll get something." I'm not a lawyer but it sure looks like what SJWC is trying to do.

Please send email, make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase and continuing requests to de-couple their revenue from the requirement to do business efficiently and your concern about their lack of openness and transparency.  If you agree with this blog please also mention the violations of CPUC rules and the tactics being used by SJWC and that the ALJ and commissioner should take a position that all the points made by SJWC should be rejected, except item O in the SJWC Comments.

You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

Tuesday, August 5, 2014

SJWC Rate Increase, "Follow the money"

In the current GRC (A1201003) how can we as non-attorneys (ratepayers) begin to understand the motivations behind the requests and positions of of parties. Keep in mind, in reality, they're arguing over, "Our Money!". There is no question SJWC will get an increase, but the real question is how much, of our money will SJWC (SJW Corp.) get. 

Where is the GRC process at? SJWC, CPUC and ORA/DRA are in the final stages, of the GRC (A1201003) process, leading up to a decision, by the CPUC Commissioners. The earliest CPUC can consider and vote is their meeting on 14 August, 2014. Both SJWC and ORA/DRA submitted
OPENING COMMENTS ON THE PROPOSED DECISION RESOLVING THE GENERAL RATE CASE OF SAN JOSE WATER COMPANY 
ORA/DRA agrees in general with the Proposed Decision and addresses items that can improve the accuracy of the Proposed Decision, especially that can impact the base rate and rate of return. In particular addressing the implied rate of return, of 12%, as well as SJWC increasing capital spending.

Bloggers Comments: SJWC may see the possibility of a loss in the GRC (A1201003). I've done a lot of negotiations and found that a strategy commonly used by the losing negotiator is to "make it more complicated", challenge everything and run the other negotiator out of time/resources, ask for "so many things" you'll get something. I've read both "Opening Comments" and the response from SJWC seems to me to be anticipating and trying to provide the CPUC commissioners, with opportunities to offer compromises. I think SJWC is creating excuses for CPUC to approve higher rates than the ALJ's Proposed Decision

In contrast SJWC challenged 19 points, of disagreement, that the Proposed Decision will reduce the SJWC revenue or provide revenue protections, to SJWC and was 37 pages long with Appendices. How can I make that statement? Simple a class A water utility revenue is determined by a standard formula and a financial statement.based on the following definition:
Rate base: The value of property upon which a utility is permitted to earn a specified rate of return as established by a regulatory authority. The rate base generally represents the value of property used by the utility in providing service and may be calculated by any one or a combination of the following accounting methods: fair value, prudent investment, reproduction cost, or original cost. Depending on which method is used, the rate base includes cash, working capital, materials and supplies, deductions for accumulated provisions for depreciation, contributions in aid of construction, customer advances for construction, accumulated deferred income taxes, and accumulated deferred investment tax credits.
The actual SJWC revenue is based effectively on a percentage of the Rate base and is called:
Rate of return: The ratio of net operating income earned by a utility is calculated as a percentage of its rate base.
Rate of return on rate base: The ratio of net operating income earned by a utility, calculated as a percentage of its rate base.
The current SJWC ROR (Rate of return) is 9.43%.  We're getting closer to the simple explanation that's driving the GRC process.

Now we look at what we as ratepayers pay to SJWC for our water. It's the sum of the costs, purchasing water, well tax, and processing the water. Plus the cost of funds for loans by SJWC, the calculated Base Rate, which includes building, vehicles, pipelines, pumps, wells, water processing facilities - minus depreciation. Then we have the salaries and benefits for staff and management, etc. Plus the 9.43% ROR which is the CPUC established "Rate of return on rate base" and which includes the shareholders dividends.

The simplified formula, shown below, shows how SJWC can increase their revenue:
R = O + (V - D)r
The elements of the traditional rate formula are defined as:
  • R is the utility's total revenue requirement or rate level. This is the total amount of money a regulator allows a utility to earn.
  • O is the utility's operating expenses.
  • V is the gross value of the utility's tangible and intangible property.
  • D is the utility's accrued depreciation. Combined (V - D) constitute the utility's rate base, also known as its capital investment
  • is the rate of return a utility is allowed to earn on its capital investment or on its rate base.
The elements in the formula should be considered as parameters that are changed in the General Rate Case, every three years. This is what SJWC and ORA (DRA) argue before the ALJ, then the ALJ submits a Proposed Decision (PD) to the CPUC Commissioners.  CPUC can approve the PD or change the PD and then approve.
With this understanding it becomes apparent that Class A California water utilities want, including SJWC argue for every three years:
  • R - SJWC wants to increase rates
  • O - SJWC claims it's mostly fixed costs and in any case ratepayers will always pay for this, includes cost of water. ORA (DRA) effectively argues for the lowest rate and limits to the growth of fixed costs, within the bounds of reliable clean water service.
  • V - SJWC tangible and intangible property (pipelines, water plants, wells) wants to increase, by     replacing and building new infrastructure.As well it includes shareholders investment, retained operating funds, etc.
  • D - SJWC wants to increase the amount of depreciation, to match the tangible and intangible property, so maximize the return on the tangible and intangible property, by building or replacing pipelines, wells, etc., so the depreciation clock is reset, at a higher interest rate, but potentially over a longer period of time.

    Note: the SJWC goal is that (V-D) increases over time to effectively increase R
  • r - SJWC wants to increase the ROR (CPUC Rate of Return).
Look at the above formula and what each element represents then look at the OPENING COMMENTS submitted by SJWC and ORA/DRA, to the ALJ and what they want to change.

We can see that SJWC is continuing to make every effort to de-couple sales from revenues. In fact it's apparently so important to SJWC, that it's almost all the first two pages of SJWC Comments, Introduction, page 2 and part of page 3.
"Specifically, the Proposed Decision would reject SJWC’s proposal to implement a full Water Revenue Adjustment Mechanism/Modified Cost Balancing Account (“WRAM/MCBA”) intended to decouple the Company’s revenues from its water sales while requiring implementation of a three-tier rate design that was premised on approval of the WRAM/MCBA, would disallow most of the Water Conservation programs budget proposed by SJWC, and would severely limit the authorized investment in Recycled Water delivery systems and in SJWC’s ongoing Pipeline Replacement Program." 
Blogger Comment: From my perspective a public company should not have taxpayers "guarantee it's profits" (Note 1) or to phrase it in Utility Talk, "SJWC wants it's ratepayers to guarantee its revenues, dividends to shareholders and the rather large salaries and benefits of it's management. Independent of its operations and how much water they sell. Where is their motivation to operate as efficiently as possible and control rate increases? It should also be noted that SJWC and ORA are in an "adversarial" relationship, as shown in the Comments of the parties to the Proposed Decision. (Bloggers simplification of an argument), I especially appreciate what appears to be a claim by SJWC in the Comments that, "John and Dave have a full WRAM, so SJWC should have it as well. If they don't we'll "sulk" and my conservation efforts will suffer and I won't be able to build more pipelines, water tanks, etc., which just happens to increase "tangible and intangible property", in the formula and surprise ratepayers bills increase."

Please read the Comments from both SJWC and ORA (DRA), see if you see a difference, in the "tone" and content of the Comments submitted. Based on the formula shown above you may be able to see the motivations for the positions SJWC has taken.

We the ratepayers pay for the entire negotiation process, every three years, it's part of the fixed costs under "O" operating expenses, in the formula. Indirectly we also pay for CPUC and ORA (DRA).In fact I've identified over a million dollars, of SJWC expenses, not including legal fees per year to argue and manage the Regulatory issues and the GRC.

Please send email, make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase and continuing requests to de-couple their revenue from the requirement to do business efficiently and your concern about their lack of openness and transparency. 

You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

Wednesday, July 30, 2014

SJWC Rate Increase maybe all wet, but CPUC has other "Hot Potatoes" !

We seem to be getting too many 
"Hot Potatoes" 
is CPUC too friendly with the Utilities?

Will the increasing criticism of CPUC delay a decision or prevent the commissioners, from improving the terms that SJWC will get on the Rate Increase (GRC A1201003)?

We are again confronted with an apparent lack of transparency and openness. We are faced with questions of potential professional integrity and whether CPUC is representing Ratepayers in an unbiased manner? What is fair and reasonable for a utility to provide either directly or indirectly through third-parties, to a government agency and it's staff and officers. This includes meals, trips, seminars that are provided to CPUC staff that is supposed, to regulate the utilities, in California? Will these possible "gratuities" have any effect on the decisions of CPUC?

This is without raising the embarrassing questions about using what is typically supposed to be working time to attend international seminars, all expenses paid? Does the "gain" from the "gratuities" need to be declared, for Federal and State taxes? It's about time we need CPUC to lead the state, I believe, in setting higher standards for integrity and ethics.  There should not be a concern on the part of the California's ratepayers that CPUC's decisions and rulings are biased in any fashion and made with awareness that a key important part of CPUC's Mission is to represent the States ratepayers and regulate the utilities.

Do we need to have a Ethics Overview Committee? To review the actions of CPUC? Composed of Ratepayers? Most cities have citizen oversight committees, of the police, why not CPUC?

Some quotes to keep in mind as we hopefully try to create an open, unbiased, transparent CPUC, for the both Ratepayers and the Utilities, of California, click on the quote to visit the source:

California Public Utility Commission 

"The CPUC regulates privately owned electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation companies, in addition to authorizing video franchises. Our five Governor-appointed Commissioners, as well as our staff, are dedicated to ensuring that consumers have safe, reliable utility service at reasonable rates, protecting against fraud, and promoting the health of California's economy."
"Working For You: Commissioners and Staff  
The Governor appoints five Commissioners for as President. Commissioners make all policy decisions, usually meeting twice a month to vote on issues noted on a public agenda. 
In order to fulfill its role in overseeing services that are essential to the lives of Californians, the CPUC employs a dedicated staff of analysts, economists, engineers, administrative law judges, accountants, lawyers, safety and professionals. It also has a Division of Ratepayer Advocates, an independent division that represents consumers in CPUC proceedings."

California Public Utility Commission - Office of Ratepayer Advocates (DRA)

ORA'S Mission 
Our statutory mission is to obtain the lowest possible rate for service consistent with reliable and safe service levels.  In fulfilling this goal, ORA also advocates for customer and environmental protections.
U.S. Supreme Court definition that has been repeatedly referenced in past Commission decisions: 

United States Supreme Court 

The United States Supreme Court has broadly defined the revenue requirement of utility companies as being the minimum amount which will enable the company to operate successfully, to maintain its financial integrity, and to compensate its investors for risk assumed. Note 7

 Note 7, D.92366 (1980) 4 CPUC 438; D.86794 (1976) 81 CPUC 53; 

It makes me wonder when confronted with a Utility requesting a 44% increase, reducing to about 39% when ORA pointed out obvious items that needed adjustment, then DRA/ORA recommends a bit more than 10%, the the ALJ's (after over two and a half years) Proposed Decision is roughly 22%. Which is over twice the inflation rate! Please keep in mind the CPUC Commissioners may change the Proposed Decision. 


We the Ratepayers have 30 (less than) 15 days to let CPUC, Public Officials and the Press/TV aware of our concerns.  As well both SJWC and ORA/DRA.

Please send email, as noted in the closing paragraphs,
time is running out, to make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase, the continuing refusal to open and transparent about their expenses and operations, Express your concern about CPUC's apparent biased position and practices working with the utilities, as well as losing sight of their responsibility to us the Ratepayers. 

Comment by the blogger James Hunter:

"We have a 6 Billion dollar proposed state bill to build infrastructure more dams and reservoirs, hopefully, and we should look hard at items that won't store or directly save water. Lets make sure the bill spends our tax money wisely, we can be sure there will be another drought and being prepared should be our goal! Let's attach a requirement for providing and disclosing public information on all matters concerning CPUC. Let's look at the expenses, travel and gratuities enjoyed by CPUC Commissioners and management.
I'm also opposed to effectively a monopoly utility having ratepayers guaranteeing their profits, in spite of other conditions and especially the "cloak of secrecy" SJW Corp. and other utilities invoke. In the spirit of disclosure, I am a shareholder in SJW Corp., I've owned ten (10) shares for over a year."
You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

Tuesday, July 29, 2014

CPUC may vote on August 14th, SJWC Rate increase!

The earliest the CPUC can rule is 14 August 2014, at the scheduled CPUC Business Meeting. We (ratepayers) won't know until the earliest 4 August if it will be on the agenda. Below is the notification on the CPUC website and the entire proposed decision:
"TO PARTIES OF RECORD IN APPLICATION 12-01-003: This is the proposed decision of Administrative Law Judge Wilson. Until and unless the Commission hears the item and votes to approve it, the proposed decision has no legal effect. This item may be heard, at the earliest, at the Commission’s August 14, 2014 Business Meeting. To confirm when the item will be heard, please see the Business Meeting agenda, which is posted on the Commission’s website 10 days before each Business Meeting."
Parties of record may file comments on the proposed decision as provided in Rule 14.3
of the Commission’s Rules of Practice and Procedure.

The public (ratepayers) can attend the business meeting and speak, as well CPUC may discuss and decide privately, then announce the results and possible changes to the proposed decision. See the procedures at: 


We still have potential issues with the GRC:
  1. The rate increase, of 22%, is more than twice the inflation rate and it's obvious SJWC will use the drought and our conservation to charge more for less water, to protect their profits.This was confirmed in a statement by John Tang, Director of Government Relations at San Jose Water Company, 

    "The company will seek reimbursement for its lost profits, which will require a temporary rate increase, he said. In 2009, similar conservation measures at the end of the last drought cost the company $5.6 million in lost water sales, and it temporarily raised rates by 2.5 percent for one year to recover them." 
    Read the entire article at the website."
  2. SJWC is still using the corporate "cloak of secrecy" provided by being a 100% wholly owned subsidiary of SJW Corp., to prevent ratepayers from seeing what is happening and what they are spending. For example in a recent interview, by KTVU 2,  John Tang and a recent Homeserv USA solicitation was shown, it was stated that over 12,000 SJWC had signed up for the insurance. If so that's $4.95 x 12 = $59.40 annually per customer or $712,800 annual premiums and SJWC probably gets $71,280 at least presently.
  3. SJWC is continuing to try to de-couple water sales (revenues) from the cost of operations, the proposed decision denies the de-coupling. In a previous post to this blog I quoted:

    "Furthermore, the results of these programs, including the advantages and disadvantages to water utilities and their customers, has not been fully analyzed, so that the Commission can determine which sales risk mechanism best serves the interests of utilities and their customers. As the current dry years persist, and the need for conservation of water resources continues, the Commission will consider in SJWC’s next GRC, if not before, whether SJWC’s current Monterey-Style WRAM is a useful water conservation mechanism that balances the risks of lost or increasing sales between the utility and its customers."

    I concluded that we are in a holding pattern and CPUC could decide to allow SJWC to use a, full WRAM (Water Revenue Adjustment Mechanism), to guarantee it's revenues and profits, in spite of potentially inefficient operations, fixed costs not being controlled, over building the infrastructure (filtering plants, pipelines, wells. reservoirs, etc.) all are part of the base rate that determines, "How much we pay and the more we pay for our water!". (I need to do a post showing how SJWC profit is determined--that's really a visit to OZ, in my opinion.)
We the Ratepayers have 30 (less than) 16 days to let CPUC, Public Officials and the Press/TV aware of our concerns.  As well both SJWC and ORA/DRA.

Please send email, as noted in the closing paragraphs,
time is running out, to make your opinion heard!

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase, the continuing refusal to disclose what SJWC gets for supporting Homeserv USA and continuing requests to de-couple their revenue from the requirement to do business efficiently and your concern about their lack of openness and transparency. 

A comment to readers, I'm in favor of water conservation, my concern is the potential misuse and profiting of any water utility from the drought. California goes through periodic droughts and our state wide water system is inadequate for our population. We have a 6 Billion dollar proposed state bill to build infrastructure more dams and reservoirs, hopefully, and we should look hard at items that won't store or directly save water. Lets make sure the bill spends our tax money wisely, we can be sure there will be another drought and being prepared should be our goal!

I'm also opposed to effectively a monopoly utility having ratepayers guaranteeing their profits, in spite of other conditions and especially the "cloak of secrecy" SJWC invokes. In the spirit of disclosure, I am a shareholder in SJW Corp., I've owned ten (10) shares for over a year.

You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com

Monday, July 14, 2014

SJWC "Proposed" Decision 22% on Rate Increase (A1201003)

ALJ Wilson filed a Proposed Decision on A.12-01-003, filing date 7/11/2014, 12:08 PM. The document with Appendixes is 153 pages long so the information in the post will be updated over several days.
Summary
San Jose Water Company (SJWC) is authorized to increase rates by amounts designed to increase revenue by $22,063,000 or 9.79% in its test year 2013, $11,579,000 or 4.72% in 2014, and $15,356,000 or 6.02% in 2015. As a result of the revenue increase granted by this decision, the monthly bill for the average SJWC residential customers using 1500 cubic feet (CCF)1 of water with a 5/8” by 3/4” meter would increase by $7.96 or 20.8% to $46.20 from $38.24 for the test year 2013
The initial topics, this Blog covers, will be the size of the rate  increase, Proposed Decision 
Summary page 2:


Year
SJWC Request
ORA/DRA Recommendation
ALJ Proposed
2013
21.51% (1)
18.56%
.05%
9.79%
2014
4.87%
3.73%
4.72%
2015
12.59%
5.56%
6.02%
Total
39.98% (2)
8.67%
22%

Note 1, reference Proposed Decision, page 8, Section 5.1, during the course of  discussions

SJWC and ORA agreed to use 18.56%
Note 2, percentage increase is compounded

It looks like SJWC got roughly 58% of the original adjusted request. For the year 2013 the 9.79% after adjustments based on interim increases, as well as 2014, will appear on the ratepayers monthly bill as a surcharge or credit, for previous periods that were not billed in accordance with the final CPUC Decision.

The second topic is the WRAM/MCBA, SJWC requested a full decoupling of revenue (profits) from operations/revenues. This is the "conserve, use less water and pay more for what you use".

Several sections of the Proposed Decision, page 118, Section 70:
29.3. Discussion The Commission does not adopt SJWC’s proposed change in its current Monterey-Style WRAM at this time. SJWC is correct that its current revenue decoupling mechanism (Monterey-Style WRAM) does not fully protect the utility against reduced sales, although it is also true that SJWC benefits through increased revenues from its Monterey Style WRAM when sales are increasing. While the Commission seeks to reduce risks both to water utilities and their customers from changes in sales through appropriate revenue and sales mechanisms which may help in conservation efforts, ORA is correct that similar mechanisms used by other water utilities were achieved through negotiated settlements which reflected many other considerations before these were adopted. Furthermore, the results of these programs, including the advantages and disadvantages to water utilities and their customers, has not been fully analyzed, so that the Commission can determine which sales risk mechanism best serves the interests of utilities and their customers. As the current dry years persist, and the need for conservation of water resources continues, the Commission will consider in SJWC’s next GRC, if not before, whether SJWC’s current Monterey-Style WRAM is a useful water conservation mechanism that balances the risks of lost or increasing sales between the utility and its customers. 
70. SJWC’s current Monterey-Style WRAM does not fully protect SJWC against reduced water sales. However, SJWC’s Monterey-Style WRAM also allows SJWC to benefit when sales increase. 
71. It is uncertain whether SJWCs’ Monterey-Style WRAM, rather than those WRAMs used by other water utilities, is an adequate mechanism to encourage conservation and whether it serves and balances the interests of the utility and its customers due to increased or decreased sales.
Basically this is a "holding pattern" there doesn't appear there is a decision, rather let's wait and see if the drought continues, how the other utilities that have revenue decoupling do over more time. SJWC did file an advise letter #456 and did get the MCRAMA, Mandatory Conservation Revenue Adjustment, to track the revenue impact of mandatory conservation.

I also haven't found any specific reference to how much SJWC is being paid by Homeserv USA and where the proceeds are going. ORA did oppose and recommend:
25.2. ORA ORA estimates gross revenue derived from NTP&S activities that are allocated to ratepayers to be $576,943 for the Test Year 2013, plus an additional $100,000 per provisions of Rules X.C.5 and X.C.6 of D.10-10-019
At least SJWC appears to be accounting for NTP&S activities and ORA/DRA is aware. Which ones are still an open question? Homeserv USA is not mentioned.

The next steps are:
The application and recommendation then go to an administrative law judge, in this case Seaneen M. Wilson. Once Wilson has announced her decision, the public has 30 days to comment before the CPUC votes. However, the CPUC can decide to allow an additional 30 days for comment, according to Christopher Chow, public information officer for the CPUC in San Francisco.
We the Rayepayers have 30 (actually only) 21days to let CPUC, Public Officials and the Press/TV aware of our concerns.  As well both SJWC and ORA/DRA 

 If you are concerned about these issues, send email to CPUC at: District 5 United eForm eMail  Simply click on the "eForm eMail" and you will get a page to fill out the information and specify the reason for your opposition to the SJWC Rate Increase and continuing requests to de-couple their revenue from the requirement to do business efficiently and your concern about lack of openness and transparency, as well as concerned that we are not being informed in a timely manner, of the status the water reduction recommended or mandatory!

You can also send an email to CPUC Public Advisopublic.advisor@cpuc.ca.gov  The Public Adviser will insure your email will be sent to all the appropriate CPUC staff members.

Other people to drop an email (note) and express your opinion are:
  • Scott Herhold, San Jose Mercury News, sherhold@mercurynews.com
  • Julie Putnam, NBC Channel 5, julie.putnam@nbcuni.com