San Jose Water Company (SJWC) Rate Increase: June 2014

Tuesday, June 17, 2014

SJWC Ratepayers Beware! What the heck is "MCRAMA"? We seem to have got it!

SJW Corp. just had their webcast for their published results for Q1 2014, a complete recording is available on the SJW Corp. Webcast Presentation 2014 First Quarter Financial Results Announcement 05/01/2014 1:00PM (ET) or 10:00AM (PT). SJW Corp. also filed it's SEC FORM 10-Q.

Excerpt from the FORM 10-Q SJW CORP - SJW
Filed: May 07, 2014 (period: March 31, 2014)
Quarterly report with a continuing view of a company's financial position
(also available at http://www.sjwcorp.com/investor_relations/sec_filings)

Note 10. Regulatory Rate Filings
On January 3, 2012, San Jose Water Company filed a general rate case application requesting rate increases of $47,394, or 21.51% in 2013, $12,963, or 4.87% in 2014, and $34,797, or 12.59% in 2015. This general rate case filing also includes: (1) recovery of under-collected balancing account balances of $2,599, (2) disbursement of over-collected memorandum account balances of $650 and (3) implementation of a full revenue decoupling Water Revenue Adjustment Mechanism (“WRAM”) and associated Modified Cost Balancing Account (“MCBA”). If approved, the WRAM and the MCBA would de-couple San Jose Water Company's earnings from customer usage. Parties to the proceeding filed open briefs on July 20, 2012 and reply briefs on August 7, 2012. On September 26, 2012, San Jose Water Company filed a motion for interim rate relief so that if a decision was not reached by the end of 2012, San Jose Water Company would be allowed to adopt interim rates, effective January 1, 2013, until a decision is adopted. To date a decision has not been adopted and interim rates are currently in effect. Interim rates were set equal to fiscal year-end 2012 rates. Differences between interim rates and approved rates are tracked in a memorandum account and will be submitted for recovery or refund. A decision on this application is expected in the second quarter of 2014..

On February 28, 2014, San Jose Water Company submitted Advice Letter No. 456. In this advice letter, San Jose Water Company notified the CPUC that San Jose Water Company was implementing conservation Tariff Rule 14.1. The CPUC's Rule 14.1 provides voluntary conservation measures for customers, focusing primarily on outdoor water use which accounts for 50% of a typical customer's water usage. In addition, San Jose Water Company requested the implementation of a Mandatory Conservation Memorandum Account (“MCMA”) to track all operational and administrative costs associated with the implementation of Rule 14.1 and implementation of a Mandatory Conservation Revenue Adjustment Memorandum Account (“MCRAMA”) to track any revenue shortfall associated with the implementation of the 20% conservation goal. The advice letter was approved on March 21, 2014 and the Rule 14.1 voluntary conservation measures, the MCMA, and MCRAMA all went into effect on March 31, 2014.

Ratepayers should make note of several important points:

SJWC is continuing to request that CPUC "de-couple" their revenue from ratepayer water usage. This is called WRAM (Water Revenue Adjustment Mechanism) and MCBA (Modified Cost Balancing Account). This means that we the ratepayers would be guaranteeing the revenue of SJWC, a wholly owned subsidiary of SJW Corporation a publicly traded company, under the symbol SJW on the New York Stock Exchange. Further SJW continues to increase stock dividends
This was done using an advise letter and avoiding apparently the "overhead" entailed, in notifying the ratepayers? of the likely "effective increase in our water rates" until we find the line item on our monthly water bill.
DRA/ORA the ratepayer advocates are opposed to the revenue de-coupling. We then find that SJWC has gotten approval for a "Mandatory Conservation Revenue Adjustment Memorandum Account (“MCRAMA”), "to track any revenue shortfall associated with the implementation of the 20% conservation goal.

That certainly appears to me we may have missed the implications of the SCVWD motion:

Excerpt from Santa Clara Valley Water District Board of Directors: Worsening water supply conditions prompt call for 20 percent water reduction target

WHEREAS, the District through coordination with retail water agencies, local municipalities and the County of Santa Clara is increasing public outreach and education to create greater awareness of countywide water supply challenges and need for efficient water use; and

WHEREAS, the District must rely on the actions of the retail water agencies, local municipalities and the County of Santa Clara to enact and implement local ordinances and water use reduction measures; and

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Santa Clara Valley Water District that a water use reduction target equal to 20 percent of 2013 water use is called for through December 31, 2014, and it is further recommended that retail water agencies, local municipalities and the County of Santa Clara implement mandatory measures as needed to achieve the 20 percent water use reduction target.

It appears this was actually s a "mandatory" water reduction (?), to meet a 20 percent water use reduction target, or was it a "mandatory" or just a "recommended"?

If your concerned about the potential San Jose Water Company accounting for revenue shortfalls and expenses, using MCRAMA, ask CPUC to request SJWC to publish a clear and transparent disclosure and the financial impact on the ratepayers and increasing water rates? Send an eMail as shown below and ask CPUC what do we get charged and how long and does this set a precedent revenue de-coupling? It would also be helpful if the wording in the various documents concerning water conservation, in the current drought, be clarified, is it mandatory or voluntary (recommended) water conservation.

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 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 Advisor public.advisor@cpuc.ca.gov The Public Advisor 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, June 13, 2014

Will SJWC (GRC) include Homeserv USA revenue sharing with ratepayers?

Based on statements by SJWC management it appears in the next several months the GRC (General Rate Case A1201003) increase will go to CPUC for review and approval. Cal Water agreed, in it's last GRC to pay it's ratepayers a share of the Homesrv USA non-regulated revenue, as is done for example, cell phone antennas, space rental, on a water utilities buildings.

Excerpt from CWS 10-K, CALIFORNIA WATER SERVICE GROUP, page 12

Service Line Insurance Billing

In 2008, Cal Water filed an application requesting a CPUC finding that past and future non-regulated transactions with HomeServe USA, aprovider of service line insurance, were in compliance with Commission rules. The CPUC subsequently established a memorandum account to record Cal Water's revenues and expenses related to the billingand other services provided to HomeServe USA. In a decision on February 28, 2013, the CPUC approved a proposed settlement agreement between Cal Water and the ORA resolving all issues in theproceeding, and authorized Cal Water to continue providing billing services to HomeServe USA. Consistent with the settlement, in April 2013, Cal Water began amortizing a portion of the memorandumaccount balance, as required by the settlement, through surcredits to residential ratepayers over a 12-month period. New rates adopted in the pending GRC proceeding will include a forecast of thecosts and revenues associated with this billing service. After the new rates go into effect, Cal Water will amortize the remaining balance and close the memorandum account.

In the case of San Jose Water Company there has not been a mention of revenue sharing with ratepayers, from Homeserv USA.

Cal Water pays 10% of the insurance premiums and the "anniversary or exclusivity" annual payments with it's ratepayers based on an agreement with ORA/DRA and approved by CPUC.

See my posting in April, "Should SJWC ratepayers get a portion of Homeserv USA revenues?".

What percentage of the Homesrv USA premiums ratepayers pay is SJWC getting?
Is SJWC getting an annual fee (anniversary or exclusivity) from Homeserv USA?
Since the terms have been negotiated and approved, with Cal Water, by ORA and CPUC, why can't it be included in the current GRC (General Rate Case A1201003)? or will the excuse be the amount of time required? We're already late by over 16 months.

If your concerned about the potential San Jose Water Company 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!