James Hunter

Tuesday, April 29, 2014

Should SJWC ratepayers get a portion of Homeserv USA revenues?

In my continuing research I noticed that DRA/ORA apparently got a ruling that affects certain revenues that Class A & B water utilities receive and apparently must pay a percentage, received from Homeserv USA to their ratepayers. Since San Jose Water Company is a Class A Water Utility, the following questions seem appropriate:
  • Does SJWC receive an annual payment from Homeserv USA? for exclusivity?
  • Does SJWC also receive an annual percentage of the premiums SJWC ratepayers pay?
  • How much are the total annual revenue that SJWC receives from Homeserv USA?
  • How will SJWC credit it's ratepayers for the 10% mentioned in the DRA/ORA report?
  • How much credit will each ratepayer receive? and when?
  • There's apparently a significant amount of revenue involved? How much?
  • Will SJWC share this information in an open and transparent fashion?
Keep in mind that this ruling reveals some interesting points that could result in credits from Homeserv USA revenues, as well as other services provided by all Class A & B including San Jose Water Company (SJWC):

"21 In November of 2011, as part of its exclusivity contract with HomeServe, CWS 
22 received the first of seven annual payments (“Annual Payment”) in the amount of 
23 $1,169,000.00 in addition to its standard contracted business activity revenue."

Note: 7 x $1,169,000.00 = $8,183,000.00 plus at least 10% of the premiums - where is the money going? Not only for California Water Services? but what about San Jose Water Company?  

General Rate Case Application 12-07-007

Page 2-3 excerpt
1 1. Overview of New Rules
2 As of July 1, 2011 new rules governing NTP&S went into effect. Rule X in D.10-
3 10-019 (Decision Adopting Standard Rules and Procedures for Class A and B Water and
4 Sewer Utilities Governing Affiliate Transactions and the Use of Regulated Assets for
5 Non-Tariffed Utility Services) and D.11-10-034 (Modified Decision Regarding Petition
6 for Modification of Decision 10-10-019) provides a uniform methodology for tracking
7 and accounting for NTP&S activities (formerly referred to as “Excess Capacity”)
8 provided by Class A and Class B water utilities using regulated resources to generate
9 additional revenues. In addition to providing uniform guidelines for unregulated cost
10 allocation, the Commission in D.10-10-019 also adopted basic rules for revenue sharing
11 with ratepayers which designate NTP&S activity types as being either “active” or
12 “passive.” This distinction between “active” and “passive” activities assigns a gross
revenue sharing rate to ratepayers of 10% to “active” and 30% to “passive” activities.4

Page 2-6-7 excerpt
20 b) Home Service USA Forecast
21 In November of 2011, as part of its exclusivity contract with HomeServe, CWS
22 received the first of seven annual payments (“Annual Payment”) in the amount of
23 $1,169,000.00 in addition to its standard contracted business activity revenue. In
response to DRA’s data request,7 24 CWS stated that it did not share any portion of the 2011
25 Annual Payment from HomeServe with ratepayers and because CWS used 2011 data for
26 test year forecasting, this revenue was excluded from CWS’s forecasted revenue sharing

 Response to Data Request MC8-003 Q2.
for Test Year 2014. In a subsequent data request response,8 1 CWS further explained that
2 pursuant to the settlement agreement between CWS and DRA in A.08-05-019, CWS was
3 not required to share the 2011 Annual Payment with ratepayers. DRA examined the
4 terms of the settlement agreement, which is currently awaiting Commission approval, and
agrees that CWS need not have shared the Annual Payment in 2011.9 5 However, the
6 pending settlement in A.08-05-019 also states that “[b]eginning with the November 2012
7 annual payment from HomeServe, ratepayers will receive a 10% share of the annual
payment that Cal Water receives from HomeServe.”10 8 For this reason, DRA
9 recommends that this Annual Payment revenue be subject to ratepayer sharing at the rate
10 of 10% for this GRC and has calculated its revenue sharing test year forecasts for each
11 district accordingly. To allocate the $116,900 ratepayer’s share of the Annual Payment
12 amongst CWS’s districts, DRA applied an allocation factor that is in proportion to the
13 HomeServe revenue generated in each CWS district.

If your concerned about the potential  San Jose Water Company not accounting for Homeserv USA revenues and  properly, transparently disclosing what is done with the revenues and what do we ratepayers should receive? Send an eMail as shown below and ask CPUC what do we get, how and when?

If you are concerned about the 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 44% Rate Increase, Homeserv USA water pipe insurance and your opinion of SJWC Customer Service 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 of the 44% Rate Increase!

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

No comments:

Post a Comment